By law, the Texas agency tasked with overseeing the child support collection process is required every six years to re-calculate, based on inflation, the maximum income against which child support can be calculated. When the current statute was originally written, child support could be calculated from a maximum net income of $7,500. In 2013, that maximum net income amount increased to $8,550. Effective September 1, 2019, the maximum net income against which child support can be calculated by state guidelines is $9,200. What does that mean and how does it work?
How Child Support is Calculated by Texas Statutory Guidelines: For purposes of calculating child support pursuant to Texas statute, net income is not necessarily the take-home pay number you see on your pay stub. Texas statutes specifically set forth a formula for how to calculate net income. First, gross income is calculated, which generally includes any income received, whether that be employment income, rental income, income from interest and dividends, capital gains, severance income, and retirement benefits (to name a few). From the resulting number, certain deductions are made – specifically for social security taxes, federal income taxes (based on the rate for a single person claiming one personal exemption and the standard deduction), state income tax and union dues (if any), and expenses for the cost of health and dental insurance. What you cannot deduct are discretionary deductions from your paycheck, such as optional 401K deductions.
Under the old law, even if the parent paying child support earned $300,000 per year (as an employee rather than being self-employed), the maximum amount of gross annual income that could be considered for child support calculations was $136,781.16 ($11,398.43 per month). That number now increases to an annual gross income of $147,399.48 ($12,283.29) per month. The percentage calculations against the net income of $9,200 per month remain the same – 20% for one child, 25% for two children, 30% for three children, 35% for four children, 40% for five children.
The effective difference between the old and the new law: The increase in the maximum net income from $8,550 to $9,200 is a difference of $650. This does not mean that parents should expect a payment different of $650 each month. You still have to apply the percentages to the increased guideline maximum. So, for those who would be eligible to receive (or obviously, pay) the maximum amount of child support, you are looking at an increase of $130 per month for one child, $162.50 per month for two children, $195 per month for three children, $227.50 per month for four children, and $260 per month for five children.
How the new law applies to old child support orders: The new increased cap on child support is not automatic. If you have an order that was signed by a judge before September 1, 2019, and the child support amount was calculated based on the maximum net income of $8,550, you must file a petition to modify the child support to receive the benefit of the increased cap. And if you were not already receiving the maximum amount and the paying parent’s income has not changed, then this law does not currently impact you.
All of this being said, this information is based on standard guidelines set forth in the code. Certain situations can have special circumstances that require an individual analysis of the amount of child support that should be ordered. An experienced family law attorney can help you with that analysis.
Rhonda Cleaves is a Plano divorce attorney with clients in Collin, Dallas, Denton, and Tarrant counties. For more information about the divorce process, call Cleaves Family Law at (972) 403-0333 or visit the firm website at www.cleaveslaw.com.