New alimony law (spousal support guidelines) coming to Illinois in 2019

When January 1, 2019 rolls around, it will mark not only the beginning of a new year, but also a new way of calculating alimony in Illinois. State lawmakers recently passed a law that will change alimony (also called spousal maintenance or support) guidelines. The changes are to comply with the tax reform law passed by Congress late last year, which will end up eliminating a major alimony tax break that has been around for about three quarters of a century, usually helping divorced men financially survive a divorce.

How are the guidelines changing?

Senate Bill 2289 was signed into law in August and it is designed to bring Illinois' alimony guidelines in line with new federal tax rules. As part of the Tax Cuts and Jobs Act that was enacted in December 2017, the alimony tax deduction is being eliminated along with the need for alimony recipients to declare their alimony as taxable income.

SB 2289 updates Illinois' alimony guidelines, which will likely result in lower alimony amounts, as the tax break of shifting the tax burden of the payor with the higher tax bracket to the payee with the lower tax bracket has been eliminated.

The changes go into effect on January 1, 2019, which is when the alimony tax break is also being eliminated. Effective January 1, 2019, no divorce decree entered as of that date or thereafter will permit an individual to take advantage of the prior IRS alimony deduction for the payor, and new guidelines shall apply.

The current law offsets 30% of the paying spouse's gross income against 20% of the recipient's gross income with a cap of 40% of the spouses' combined total gross income. As the tax break is abolished, the calculations change from a gross (pre-tax) perspective to a net (post-tax) calculation. The new law will now offset 33.33% of the paying spouse's net income minus 25% of the recipient's net income with a cap of 40% of the spouses' combined net incomes.

A heavier burden for both spouses

The end of the deduction will likely mean less money for both spouses and more money going towards taxes. It is anticipated that attorneys shall be strenuously trying to settle cases and get judgments entered before the January 1, 2019 deadline arrives. Divorces entered on or before December 31, 2018 and any subsequent modifications to those divorces will continue to follow the current law and will qualify for the ability to deduct alimony payments for the paying party.

As CNBC reported the old law made the tax deduction a win-win for both payors and recipients. Since payors were often in a higher tax bracket than recipients, the tax break typically represented a larger sum than what recipients would otherwise have to pay in taxes on the alimony they received. That meant that payors could be more flexible with how much they were willing to spend on alimony. With that flexibility now gone and less money available to be divided for both spouses, it is expected that divorce negotiations will be more contentious.

Divorce law

For who are going through a divorce or have another family law issue they need help with, it is important to reach out to a skilled family law attorney who will advocate for you. The Law Offices of Jeffery M. Leving, Ltd. is a family law firm that can provide you the legal services you need with the professional expertise you desire and deserve. Right now, the loss of an IRS alimony deduction makes it even a greater necessity to retain a law firm that has your back. You can contact the Law Offices of Jeffery M. Leving, Ltd. to learn your legal options at [email protected].