On January 1, the new 2025 Child Support Formula (“Formula”) took effect. This article lists some of the major changes in the formula.
Deviation: The new language clarifies that a deviation is not required, even if a factor is met. It also clarifies that the list of deviation factors is not exhaustive.
The Formula removed the deviation factor for the costs and fees associated with a conviction or incarceration because they are now considered a deduction (see below).
The Formula clarifies when the deviation factor should apply based on a parent’s support of a stepchild or other child for whom the parent is legally responsible (e.g., legal guardianships).
To ensure that a support payer who has a child primarily in the care of a nonparent custodian has funds to exercise parenting time, the Formula includes clarified language that allows for deviation when there is an increase in expenses to the payer or decrease in expenses to the payee due to a parent exercising significant parenting time with the child. The new language also includes a way to deviate by applying the parental time offset equation and setting the nonparent custodian’s income as zero.
The Formula added clarification to the deviation factor when child care expenses are more than 50 percent of the base support obligation to define base support and child care expenses. Additionally, the Formula supplement offers further guidance and details that the intention of the deviation factor is not to reduce the base support obligation; rather, it is to reduce the child care obligation.
Reduced or Deferred Income and Depreciation: When a parent has a business and there is reduced or deferred income, the Formula clarifies that the retained profits or earning are included as the parent’s income unless the parent can show that retaining those amounts are essential for the operation of the company. Historical operations should be viewed to determine whether the retention is a means of reducing income or part of normal business practices.
In order to ensure consistent application, the Formula clarifies that accelerated depreciation must be added back to a parent’s income, but with proof, the court may take the lesser of actual expenses (for example payments under a financing plan) or straight line depreciation.
Imputation: The Formula provides that the court “may” (instead of “should”) consider additional costs associated with employment that is imputed (e.g., child care, uniforms, tools, etc.). This also clarifies that the expenses should be related to the employment or education of the parent and are based on the costs for the children in common on the case.
Conviction or Incarceration Costs: The Formula adds a new item under deductions from income to allow a parent’s costs related to conviction or incarceration. The Formula requires the expenses that qualify for deduction to be recurring, and not a one-time payment. The language includes a clarification that the conviction or incarceration must not be related to a failure to support the children or be a crime against a child in the current case or that child’s sibling, other parent, or custodian.
Additional Child Adjustment: The Formula has new language to better explain when the additional child adjustment applies, and which dependents are considered additional children. To make this clarification, the Formula removed the parenthetical language that was meant to explain which dependents to consider, but in practice caused confusion. It is expected that this clarification will result in more children being counted as an additional child.
Apportioning Costs and Expenses: The Formula changes how costs and expenses are apportioned between parents. In the past, costs are apportioned based on the parent’s share of family income; except that the apportionment could not be less than 10 percent or more than 90 percent. The new Formula apportions all costs and expenses on the actual share of income, and allows the court, within it’s discretion, to apportion a parent’s percentage to zero when the parent is incapacitated or when the parent has no income, the total support is set to zero, and the parent does not have an ability to pay or work. This change applies to all expenses that are apportioned, including base support, medical expenses, health care, and child care.
Ordinary Medical Expenses (OME): The Formula Committee (“Committee”) reviewed economic consumer expenditure spending data and changed the amount of OME from $454 per child to $200 per child. Based on the recent economic data, and the reimbursement nature of OME, the Committee wanted to ensure that the new level appropriately reimbursed families, but was set at an amount that did not create an overpayment of OME by the support payer in the majority of cases.
Over the last several review cycles, four reasons to eliminate OME have been added to the Formula h. Those are: (a) both parents routinely take one or more children-in-common for medical care and incur qualifying medical expenses; (b) the support payer will likely incur most qualifying out-of-pocket costs for the children; (c) an incapacitated payer’s base support obligation is set at zero (§4.02); or (d) the recipient has an employer-paid benefit (e.g., health care reimbursement arrangement) that pays the recipient’s initial out-of-pocket expenses for the children. Based on a review of the calculation data, it did not appear that these reasons were being used. The Formula clarifies that the court should “typically” exercise discretion and eliminate OME when one or more of the four reasons is present.
Child Care: The Formula more closely aligns the presumed age child care ends with the federal Internal Revenue Service standards (the last day of the month the child is under 13).
Abatement Due to Incarceration: Due to changes in state law regarding abatement for incarceration equal to or greater than 180 consecutive days (MCL 552.517f), the definition of “incapacitation” needed to be amended to clarify that the statutory language controls when incarceration is greater than 179 consecutive days.
Economic Upgrade: The Formula has a new approach to calculating the cost of raising children, which most states now use, and is based on the most current economic data. The former approach was based on a study from 1972-73 data that has been updated for inflation.
Written by The Friend of the Court Bureau (FOCB) staff
