Effective January 1, 2010, the Indiana Supreme Court issued changes to the Indiana Child Support Guidelines. While the revisions affect numerous aspects of the Guidelines, perhaps the most significant change is that child support payment amounts under the revised Guidelines will increase, and in some cases very substantially, for parents earning in excess of $208,000 per year (pre-tax).
For more than 20 years, the Guidelines have relied upon a mathematical formula to compute a child support figure that is presumed by Indiana courts to be the proper amount of child support. While numerous factors are input into this formula in a particular child support calculation, the most substantial inputs are the parents’ respective incomes. As income increases, so does the child support obligation. However, one facet of the mathematical formula used previously by the Guidelines, before this year’s revisions, is that the weight given to a parent’s income began to plateau once the parents earned more than $208,000 per year. So, for example, an extra $20,000 of annual income would cause a substantial increase in support for a parent earning $50,000 per year, but a negligible difference for a parent earning $400,000 per year.
Under the revised Guidelines, this “plateau effect” has been eliminated. A child support obligation will now continue to increase directly as incomes increase, with no leveling off above $208,000 per year of gross income.
To give a sense of how the old Guidelines and revised Guidel
ines create diverging results for high income earners, consider the following. For simplicity, suppose that Father is the sole income earner and that Father and Mother are calculating support for one child. Below, for each level of income, is what Father would pay to Mother in weekly child support under the old Guidelines and the revised Guidelines (again, for ease of calculation, this does not factor in parenting time or other credits):
It should be noted that while this change to the Guidelines became effective January 1, 2010, the change does not automatically cause a modification of support in a particular case. Modifications can only be implemented by an order of the court on a case-by-case basis. Therefore, high income earners (or former spouses of high income earners) should contact the Private Client Group at Bingham McHale LLP to discuss how, if at all, these changes may affect them.