Child Support Formula: How Payments Are Calculated

Three Main Calculation Models

There is no single child support formula used across the United States. Instead, states have adopted one of three primary models for calculating child support obligations. Understanding which model your state uses is the first step to understanding how your support amount will be determined.

The three models are:

• Income Shares Model: Used by approximately 40 states, this model calculates support based on the combined income of both parents and allocates the obligation proportionally.
• Percentage of Income Model: Used by states including Texas, Alaska, and Wisconsin, this model applies a flat percentage of the non-custodial parent's income.
• Melson Formula: Used by Delaware, Hawaii, Montana, and West Virginia, this is a modified Income Shares model with additional protections for the basic needs of both parents and the child.

Each model has strengths and weaknesses, and states often add their own variations and adjustments on top of the base model. Below, we explain each formula in detail.

Income Shares Formula: Step by Step

The Income Shares model is the most widely used approach in the United States. Developed in 1987 by the National Center for State Courts, it is based on the principle that a child should receive the same proportion of parental income that the child would have received if the parents lived together.

Here is how the Income Shares formula works, step by step:

1. Determine each parent's gross income: The court calculates the monthly gross income for both parents. This includes wages, salary, overtime, bonuses, commissions, self-employment income, rental income, investment income, and certain government benefits. Some types of income, such as means-tested public assistance, are typically excluded.
2. Convert gross income to net income: Each parent's gross income is adjusted by subtracting allowable deductions, which typically include federal and state income taxes, Social Security and Medicare taxes, mandatory retirement contributions, union dues, health insurance premiums, and previously ordered child support for other children.
3. Calculate combined parental income: Both parents' net incomes are added together to get the combined household income figure.
4. Determine the basic support obligation: Using the state's economic table (also called a schedule of basic child support obligations), the court looks up the amount that parents at that combined income level would typically spend on their child. This table accounts for the number of children and varies by state.
5. Allocate the obligation proportionally: Each parent's share of the basic obligation is determined by their proportion of the combined income. For example, if Parent A earns $4,000 per month and Parent B earns $6,000 per month (combined $10,000), Parent A is responsible for 40% and Parent B for 60% of the support obligation.
6. Adjust for custody time: In many Income Shares states, the formula accounts for the time the child spends with each parent. Some states use a cross-credit or offset method, while others apply a percentage reduction based on overnight stays.
7. Add additional expenses: Work-related childcare costs, health insurance premiums for the child, extraordinary medical expenses, and sometimes educational expenses are added to the base obligation and divided between the parents proportionally.
8. Calculate the final payment: The non-custodial parent (or the parent with less parenting time) typically pays the net amount to the other parent after accounting for direct expenses incurred during their own parenting time.

The Income Shares model aims to be fair to both parents while prioritizing the child's financial needs. However, the many variables involved mean that actual calculations can become complex, especially with self-employment income, variable earnings, or shared custody arrangements.

Percentage of Income Formula

The Percentage of Income model is simpler than the Income Shares model. It calculates child support as a percentage of the non-custodial parent's net income, without directly considering the custodial parent's income in the calculation.

The basic formula is:

Child Support = Non-Custodial Parent's Net Income x Statutory Percentage

The statutory percentage depends on the number of children. For example, in Texas:

• 1 child: 20% of net resources
• 2 children: 25% of net resources
• 3 children: 30% of net resources
• 4 children: 35% of net resources
• 5 children: 40% of net resources
• 6+ children: Not less than 40%

Net resources in Texas include wages, salary, commissions, overtime, tips, bonuses, self-employment income, and certain other income, minus taxes, Social Security, union dues, and health insurance for the child.

The Percentage of Income model also typically includes an income cap. In Texas, the percentage applies to the first $9,200 of monthly net resources. For income above that amount, the court has discretion to order additional support based on the child's needs.

While this model is straightforward and easy to calculate, critics point out that it does not account for the custodial parent's income, which means two families with the same combined income but different income distributions could produce very different support amounts.

The Melson Formula

The Melson Formula, named after Judge Elwood F. Melson Jr. of the Delaware Family Court, is the most complex of the three models. It is used by Delaware, Hawaii, Montana, and West Virginia. The formula proceeds in three tiers:

1. Primary support allowance: First, each parent is allocated a minimum self-support reserve to ensure they can meet their own basic living needs. Then, a primary support amount is calculated for the child based on the parents' remaining income.
2. Standard of living adjustment: After basic needs are met, a portion of any remaining income is allocated to improve the child's standard of living. This ensures that children benefit from their parents' financial success beyond mere subsistence.
3. Balancing provision: The formula includes a mechanism to ensure that neither parent's net income, after paying or receiving child support, falls below the poverty level or results in an inequitable outcome.

The Melson Formula is praised for its thoroughness in protecting all parties' basic needs while still ensuring children benefit from both parents' incomes. However, its complexity makes it harder for parents to estimate their obligations without assistance.

Gross-to-Net Income Conversion

Before any formula can be applied, the court must convert each parent's gross income to net income. This is a critical step because the difference between gross and net income can be substantial, and errors in this conversion can significantly affect the support amount.

Typical deductions allowed when converting gross to net income include:

• Federal income tax: Based on the parent's filing status, dependents, and applicable tax rates
• State and local income tax: Where applicable
• Social Security and Medicare (FICA): Currently 7.65% for employees
• Mandatory retirement contributions: Required pension or retirement plan contributions
• Union dues: Required membership fees for union members
• Health insurance premiums: Some states deduct the parent's own health insurance; others only deduct the portion covering the child
• Prior child support orders: Support being paid for children from other relationships
• Alimony/spousal support: Payments being made under a court order to a former spouse

Some states also allow deductions for extraordinary expenses or hardships, such as catastrophic medical costs or emergency needs. The specific deductions allowed vary by state, so it is important to understand your state's rules.

Common Adjustments

After the base formula is applied, most states make additional adjustments to account for specific circumstances:

Healthcare Costs

Most states add the cost of health insurance for the child to the base support obligation and divide it proportionally between the parents. Out-of-pocket medical expenses (co-pays, deductibles, prescriptions) are typically also divided between the parents. Some states include dental and vision insurance as well.

Childcare Expenses

Work-related childcare costs, including daycare, before- and after-school care, and summer programs, are typically added to the base support amount and divided proportionally. These costs can be substantial and often significantly increase the total support obligation.

Custody Adjustments

When parents share physical custody, most states adjust the support calculation to account for the time the child spends with each parent. The most common approaches include:

• Cross-credit method: Each parent's support obligation is calculated, and the amounts are offset against each other. The parent with the higher obligation pays the difference.
• Percentage-of-time reduction: The paying parent's obligation is reduced by a percentage based on the number of overnights the child spends with them.
• Adjusted income approach: The court reduces the paying parent's income in the formula to account for expenses incurred during their parenting time.

Special Needs

Children with special needs may require additional support for medical care, therapy, specialized education, or equipment. Most states allow courts to deviate from the standard formula to account for these extraordinary expenses.

Example Calculations by State

To illustrate how the different formulas produce different results, consider this scenario: the non-custodial parent earns $5,000 per month in net income, the custodial parent earns $3,000 per month in net income, and they have one child.

Example 1: California (Income Shares)

California uses the Income Shares model. The combined net income is $8,000 per month. Using California's guideline table, the basic child support obligation for one child at this income level is approximately $1,400 per month. The non-custodial parent earns 62.5% of the combined income, so their share would be approximately $875. After applying California's specific formula adjustments (including tax considerations and a low-income adjustment if applicable), the final order would likely be in the range of $900 - $1,100 per month.

Example 2: Texas (Percentage of Income)

Texas uses the Percentage of Income model. The non-custodial parent's net income of $5,000 per month is multiplied by 20% (for one child), resulting in a base support amount of $1,000 per month. If there are health insurance costs for the child, those would be added on top. Texas does not consider the custodial parent's income in the calculation.

Example 3: Delaware (Melson Formula)

Delaware uses the Melson Formula. First, each parent receives a primary support allowance for their own needs (approximately $1,150 per month per parent in Delaware). After subtracting these allowances, the remaining income is used to calculate primary support for the child. A standard-of-living adjustment is then applied to any income above the primary levels. For this income scenario, the result would typically be in the range of $950 - $1,200 per month, depending on the specific allowances and adjustments in effect.

As you can see, the same income scenario produces different results depending on the state and model used. This is why it is important to understand your own state's specific formula and to use a calculator that is calibrated to your state's rules.

To estimate your child support amount, try our free child support calculator. For more information about how support amounts are determined, read our articles on what child support is based on and average child support payments.