How Recent Changes to State and Federal Law Affect Spousal Maintenance

 Posted on August 31, 2018 in Divorce

For many couples, spousal maintenance is an important issue to address during divorce. Alimony payments can help a lower-earning spouse maintain a standard of living similar to what they enjoyed while they were married, and they will also have a major impact on the finances of a higher-earning spouse. However, divorcing couples should be aware that there are significant changes in store for divorces which are finalized on or after January 1, 2019. On that date, both federal and state laws will be going into effect that will change the way courts award spousal maintenance and how alimony is treated for tax purposes.

Changes to Federal Law

At the federal level, alimony will no longer be tax deductible for the paying spouse. For the spouse receiving spousal maintenance, the new law does not require that spousal support be claimed as income. Experts generally agree that this will likely have the effect of smaller spousal maintenance payments, since more of the paying spouse’s income will go toward paying taxes.

Changes to Illinois Law

The state of Illinois has also changed its laws on spousal maintenance in two main respects. The first change to the law concerns how courts will decide if spousal support is appropriate at all between the spouses. Not every divorcing couple will qualify for spousal support. 

Under the existing law, one of the factors a court must consider was “the tax implications of the property division upon the respective economic circumstances of the parties.” The law that will go into effect next year instead requires courts to consider “the tax consequences to each party.” Thus, the change expands what the court can weigh when deciding whether spousal support is proper, and it presumably now includes the consideration of how the new federal tax law will affect the parties.

The second change to state law relates to the spousal maintenance formula. The new law provides that the amount of spousal support should be one-third (33 ⅓ %) of the paying spouse’s net income less one-quarter (25%) of the payee spouse’s net income. As with the existing laws, the new law requires that alimony payments, when combined with the receiving spouse’s income, cannot be more than 40 percent of the combined net incomes of the spouses.

Under the new law, the percentages of the spouses’ incomes used to determine maintenance has changed, although the 40 percent cap will stay in place. The new law also uses net income instead of gross income, which will likely lower the income figures used in the calculation.

Call an Elgin Spousal Maintenance Lawyer for More Information

If you are contemplating divorce, or if you need assistance resolving issues related to spousal maintenance, you should contact an experienced Kane County divorce attorney as soon as possible. Because of the state and federal laws that will soon be in place, it may be in your best interests to act quickly in order to preserve your rights under existing law.

At the law firm of Ariano Hardy Ritt Nyuli Richmond Lytle & Goettel, P.C., our attorneys stay informed of all changes to state and federal laws that affect our clients. We provide dynamic representation to our clients, working to help them reach the best possible outcome in their divorce case. To schedule your free consultation, call our offices today at 847-695-2400.

Source:

http://www.ilga.gov/legislation/publicacts/100/PDF/100-0923.pdf