New Guidelines for Calculating “Alimony” Take Effect

Effective January 1, 2018, guidelines in the Illinois Marriage and Dissolution of Marriage Act (IMDMA) for determining maintenance (f/k/a alimony) amounts have changed.

IMDMA lays out a formula for calculating maintenance: 30% of the payor’s gross income less 20% of the payee’s gross income, with the payee’s total income not to exceed 40% of the parties’ combined gross income. This formula was applied to families earning up to $250,000. It now applies to those earning up to $500,000.

The new guidelines also impact the duration of maintenance obligations. Previously, the duration of maintenance was evaluated based on 5-year blocks of time. The update now calculates the duration based on a year-to-year basis, so that the maintenance obligation may be shorter. Additionally, any temporary maintenance paid during divorce proceedings might be credited to the post-divorce maintenance, further decreasing that obligation.

Further changes are coming next year, when the new federal tax law takes effect on January 1, 2019. Under those rules, maintenance will no longer be tax deductible for the payor or taxable for the payee.

Again, your attorney can advise you on how this might impact maintenance and child support calculations, as well as overall settlement negotiations, and can offer strategies for minimizing tax obligations while maximizing net income.