The beginning of 2019 saw an important change for couples looking to include spousal maintenance in their divorce agreements. A federal tax reform law from 2017 eliminated the popular alimony tax deduction. Spousal maintenance payors can no longer claim a tax deduction on their payments for any divorce agreement created starting in 2019. In turn, maintenance recipients are not required to include the payments in their taxable income. The alimony deduction was an incentive for payors to agree to higher maintenance payments, and divorce professionals feared that its elimination would make maintenance negotiations more difficult. States had more than a year to prepare for the elimination of the alimony deduction, and Illinois responded in 2018 with a revision to its spousal maintenance law.
There were three major changes to Illinois’ spousal maintenance law. The first was that the formula for determining payments uses net income instead of gross income. Your net income is the money you receive in a paycheck after deductions for taxes and benefits plans. Illinois believes this switch is better at accounting for the tax burden of maintenance payers.
The next change was to the payment formula:
- Before 2019, the monthly spousal maintenance payments were 30 percent of the payor’s gross monthly income minus the 20 percent of the recipient’s gross monthly income.
- Now, the payments are 33.3 percent of the payor’s net monthly income minus 25 percent of the recipient’s net monthly income.
There is the same limit on maintenance payments: the payment amount plus the recipient’s net monthly income cannot exceed 40 percent of the combined net monthly incomes of the recipient and payor.
Illinois also expanded its formula for determining how long the payor must pay maintenance. The duration of your maintenance payments is a specified percentage of the number of years you were married, with your years of marriage also determining which percentage you would use. Previously, Illinois divided the percentages into five-year intervals, such as 20 percent for people married five or fewer years and 40 percent for people married more than five but fewer than 10 years. Now, each year of marriage after five years has its own percentage. It is 20 percent for marriages that are less than five years and increases by four percentage points each year until year 20, when courts may consider permanent maintenance.
Contact a Kane County Divorce Attorney
If your income is smaller than your spouse’s income, then spousal maintenance payments may be vital to maintaining your familiar standard of living. A Batavia, Illinois, divorce lawyer at Van Larson Law, P.C., will help you negotiate maintenance payments that meet your financial needs. Schedule a consultation by calling 630-879-9090.