Quit your job to lower child support? How Texas courts use earning potential (§154.066)

This post explains how the Texas Family Code treats an obligor whose income dropped because of a choice about work. It is not legal advice, it is not a substitute for the advice of an attorney, and it does not predict what a court will order in your case. Whether a particular job change counts as intentional unemployment or underemployment is a finding a court makes on the evidence in front of it. A Texas family lawyer can advise on a specific case. What follows is the statute, the leading Texas Supreme Court opinion, and the arithmetic.

The short version

• Under §154.066(a), if the obligor’s actual income “is significantly less than what the obligor could earn because of intentional unemployment or underemployment, the court may apply the support guidelines to the earning potential of the obligor.”
• The word is “may.” Applying the guidelines to earning potential is discretionary, and under Iliff it requires a finding of intentional unemployment or underemployment.
• In Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011), the Texas Supreme Court held that “intent to avoid child support need not be proven” before a court applies the guidelines to earning potential. Intent to avoid support may still be considered as a factor.
• Two subsections added after Iliff: in deciding whether an obligor is intentionally unemployed or underemployed, a court “may consider evidence that the obligor is a veteran” seeking or receiving certain VA benefits (§154.066(b)), and it “may not consider incarceration as intentional unemployment or underemployment” (§154.066(c)).
• Once a court settles on an income figure, the arithmetic does not change. Net resources are computed under §154.062 and the §154.125 percentage is applied. Our worked example below shows the gap between a $48,000 salary and a $90,000 earning-potential figure: $679.13 a month versus $1,202.42 for one child.

What §154.066 actually says

Section 154.066 has three subsections. Subsection (a) is the rule:

“If the actual income of the obligor is significantly less than what the obligor could earn because of intentional unemployment or underemployment, the court may apply the support guidelines to the earning potential of the obligor.”

Subsection (b) says the court “may consider evidence that the obligor is a veteran” who “is seeking or has been awarded” VA disability benefits or non-service-connected disability pension benefits, each as defined in 38 U.S.C. §101. Subsection (c) says the court “may not consider incarceration as intentional unemployment or underemployment when establishing or modifying a support order.”

Subsection (a) has four moving parts.

There has to be a gap, and it has to be significant. The comparison is between “actual income” and “what the obligor could earn.” The statute applies only when actual income is “significantly less”; it does not define “significantly,” and Iliff calls it a limit on applying the statute.

The gap has to be caused by intentional unemployment or underemployment. The statute ties the shortfall to the choice. Iliff lists “economic conditions that legitimately preclude full employment” and “an active but unfruitful pursuit of employment” as relevant rebuttal evidence.

Only the obligor is named. Section 154.066 speaks of the obligor’s earning potential. The obligee’s earning potential appears elsewhere, as one of the factors in §154.123(b)(5), covered below.

The result is the same formula on a different number. The court applies “the support guidelines” to earning potential. Nothing in §154.066 creates a separate schedule or a penalty. The percentage is the percentage; only the income it runs on changes.

The history lines on the official site show §154.066 was last amended in 2021 (Acts 2021, 87th Leg., R.S., Ch. 552 (S.B. 286), eff. September 1, 2021) and before that in 2013. There is no 2025 amendment to §154.066, §154.0655, §154.067, or §154.068 on the site, which reports its contents current through the 89th Legislature, 2nd Called Session, 2025.

Iliff v. Iliff: no proof of intent to avoid support required

Before 2011, Texas courts of appeals were split on what “intentional” meant. The Supreme Court described the split directly: “Twelve of the fourteen Texas courts of appeals have answered this question in the affirmative, interpreting Texas Family Code section 154.066 to require proof that the obligor is intentionally unemployed or underemployed for the purpose of avoiding child support.”

Iliff resolved it the other way. From the opening of the opinion:

“Because the language of Texas Family Code section 154.066 does not require such proof, we hold that intent to avoid child support need not be proven for the trial court to apply the child support guidelines to earning potential instead of actual earnings. However, a trial court may properly consider an obligor’s intent to avoid child support as a factor, along with other relevant facts, in an intentional unemployment or underemployment analysis.”

What the statute does require, the court said, is narrower: “There must be a finding that the obligor is intentionally unemployed or underemployed, meaning an obligor consciously chooses to remain unemployed or underemployed. But there is nothing in the statute requiring further proof of the motive or purpose behind the unemployment or underemployment.”

The opinion closes by disapproving “courts of appeals opinions to the extent they require proof of intent to avoid child support.”

So the answer to “can my ex quit to avoid child support” has a structural part and a factual part. Structurally, a court does not need proof that avoiding support was the motive. Factually, whether a particular departure is intentional unemployment or underemployment, and whether to apply the guidelines to earning potential if it is, are questions for the trial court.

What Iliff says about how the question gets decided

Iliff did not turn every pay cut into an earning-potential case. Several passages describe the limits.

On burden: “Once the obligor has offered proof of his or her current wages, the obligee bears the burden of demonstrating that the obligor is intentionally unemployed or underemployed. The burden then shifts to the obligor, if necessary, to offer evidence in rebuttal.”

On caution: “Trial courts should be cautious of setting child support based on earning potential in every case where an obligor makes less money than he or she has in the past.” The court said the Legislature addressed that concern “in part” by limiting the statute “only to situations where the obligor makes ‘significantly less’ money because of intentional unemployment or underemployment.”

On reasons, the court listed examples of rebuttal evidence a court properly considers, including obligors “who alter their employment situations to spend more time with their children, to live closer to their children in order to attend their events and be more involved in their lives, or to provide their children with better health benefits,” and other objectives such as “whether an obligor alters his or her employment situation to start a new business, to gain further education, to become a public servant, or to address health needs.” It added that “such explanations are not always sincere,” and the trial judge, as fact finder, weighs them.

On the record: “the trial court must make a finding of intentional unemployment or underemployment and its decision to base child support on earnings potential rather than actual earnings must be supported by the record.”

Footnote 5 of the opinion notes that the same §154.066 analysis “may be applied in both original child support orders and modifications of existing child support orders.”

The Iliff numbers

The facts of Iliff give a sense of what “earning potential” meant in one real record. The opinion recites that the obligor “voluntarily quit a job making $102,000 a year,” and that the trial court “set James’s child support payments based on an earning potential of $5,000 a month, or $60,000 a year, $42,000 less than James’s salary from the job he voluntarily left.” The Supreme Court held the trial court “did not abuse its discretion.”

The point worth noticing is that the earning-potential figure the court found was not the old salary. Earning potential is itself a finding, and nothing in §154.066 says it equals the last paycheck.

Iliff was decided in 2011, before the 2013 and 2021 amendments added subsections (b) and (c). The sentence the court construed is the same sentence that is subsection (a) today.

§154.0655: what the court looks at when there is no evidence of resources

The 2021 amendments added §154.0655, titled “Imputation of Income.” Subsection (b) states the default: “To the extent possible, the court shall rely on evidence of a party’s resources when applying the support guidelines.”

Subsection (c) applies only “[i]n the absence of evidence of a party’s resources,” and then directs that the court, “when applying Section 154.066 or 154.068, shall consider relevant background circumstances regarding the obligor.” The list is specific: the obligor’s assets, residence, employment, earnings history, job skills, educational attainment, literacy, age, health, criminal history, barriers to employment, and record of seeking work; “job opportunities in the obligor’s community”; “the prevailing wage in the obligor’s community”; and “whether there are employers willing to hire the obligor.”

§154.068: when there is no evidence of resources

Section 154.068(a) is a different rule for a different situation: “In the absence of evidence of a party’s resources, as defined by Section 154.062(b), the court shall presume that the party has income equal to the federal minimum wage for a 40-hour week to which the support guidelines may be applied.”

Section 154.066 is about a gap between actual income and potential. Section 154.068 is about no evidence of income.

The federal minimum wage is $7.25 per hour, effective July 24, 2009, per the U.S. Department of Labor. The presumption works out to $7.25 × 40 × 52 = $15,080 a year, or $1,256.67 a month gross. Run through the §154.062 deductions the way our engine computes them for 2026 (6.2% Social Security, 1.45% Medicare, and no federal income tax because $15,080 is below the $16,100 standard deduction), net resources are $1,160.54. That is above the $1,000 line in §154.125(c), so the standard 20% schedule applies: $232.11 a month for one child.

Section 154.068(b) carves out incarceration: the presumption “does not apply if the court finds that the party is subject to an order of confinement that exceeds 90 days and is incarcerated in a local, state, or federal jail or prison at the time the court makes the determination regarding the party’s income.”

§154.067: assets, not jobs

Section 154.067(b) is the asset-side counterpart: “The court may assign a reasonable amount of deemed income to income-producing assets that a party has voluntarily transferred or on which earnings have intentionally been reduced.”

Worked example: $48,000 actual, $90,000 potential

Take an obligor who earned a $90,000 W-2 salary and now earns $48,000 in a new job. These are hypothetical figures chosen to show the mechanics. They are not an estimate of what any court would find as earning potential in any case; as Iliff shows, a court’s figure can sit well below the prior salary.

We ran both figures through our Texas engine (the same code behind the calculator) with no health insurance, union dues, or retirement deductions, and checked each line by hand. Federal income tax under §154.062(d)(2) uses the single-filer rate and standard deduction. For 2026 the IRS sets the single standard deduction at $16,100, with 10% up to $12,400, 12% over $12,400, and 22% over $50,400, and states that “personal exemptions remain at 0.” Social Security is 6.2% and Medicare is 1.45%, per the Social Security Administration.

Monthly figure	Actual: $48,000/yr	Earning potential: $90,000/yr
Gross	$4,000.00	$7,500.00
Social Security (6.2%)	$248.00	$465.00
Medicare (1.45%)	$58.00	$108.75
Federal income tax	$298.33	$914.17
Net resources	$3,395.67	$6,012.08
One child (20%)	$679.13	$1,202.42
Two children (25%)	$848.92	$1,503.02

The federal income tax lines, worked:

• $48,000 − $16,100 = $31,900 taxable. 10% × $12,400 = $1,240, plus 12% × $19,500 = $2,340, for $3,580 a year, or $298.33 a month.
• $90,000 − $16,100 = $73,900 taxable. $1,240, plus 12% × $38,000 = $4,560, plus 22% × $23,500 = $5,170, for $10,970 a year, or $914.17 a month.

The difference for one child is $1,202.42 − $679.13 = $523.29 a month. For two children it is $1,503.02 − $848.92 = $654.10 a month.

Two observations from the table. First, the gap in support is smaller than 20% of the gap in salary. The salary difference is $3,500 a month gross, but net resources differ by $2,616.41, because taxes rise with income. Second, in both runs the engine applied the percentage to the whole net resources figure, because neither is near the cap on net resources in §154.125(a). Above the cap, a different rule takes over, which we covered in our post on §154.126.

The obligee’s earning potential

Section 154.066 names only the obligor. The obligee’s side appears in §154.123, which lists the factors a court considers in deciding whether applying the guidelines “would be unjust or inappropriate under the circumstances.” Factor (b)(5) is:

“the amount of the obligee’s net resources, including the earning potential of the obligee if the actual income of the obligee is significantly less than what the obligee could earn because the obligee is intentionally unemployed or underemployed and including an increase or decrease in the income of the obligee or income that may be attributed to the property and assets of the obligee”

The mechanism is different. The obligor’s earning potential can become the income the percentage runs on. The obligee’s earning potential is one factor among seventeen in deciding whether to vary from the guideline amount, which §154.122(a) presumes “to be reasonable.”

Findings

Section 154.130 requires findings when “a party files a written request with the court before the final order is signed, but not later than 20 days after the date of rendition of the order,” when “a party makes an oral request in open court during the hearing,” or when the amount ordered “varies from the amount computed by applying the percentage guidelines under Section 154.125 or 154.129.” Required findings include “the net resources of the obligor per month are $______” and “the percentage applied to the obligor’s net resources for child support is ______%.” Separately, Iliff requires “a finding of intentional unemployment or underemployment” supported by the record. For a reader trying to understand an existing order, the findings, where made, are where the court’s net resources figure is stated.

What our calculator does, and does not, do

Our Texas child support calculator computes its main estimate on the income entered as the obligor’s actual income. It does not decide whether anyone is intentionally unemployed or underemployed, and it does not estimate anyone’s earning potential. Those are findings only a court can make.

The wizard has an optional field labeled “Imputed annual gross (optional what-if).” When it is filled in, the main estimate does not change. The result also shows a separate, labeled what-if figure: guideline support computed on the earning-potential figure entered, through the same §154.062 net resources and §154.125 percentage path as the main estimate, with the cap set by the computation date. In that what-if, the entered figure replaces wage and self-employment income; other income, such as retirement or rental income, and the deductions are kept as entered.

With the post’s own example (one child, 2026 figures), $48,000 entered as actual income produces a main estimate of $679.13 a month, and $90,000 entered in the what-if field produces a what-if figure of $1,202.42. Those match the two columns of the table above.

Primary sources

• Tex. Fam. Code Chapter 154 at statutes.capitol.texas.gov. §154.066 (intentional unemployment or underemployment), §154.0655 (imputation of income), §154.067 (deemed income), §154.068 (wage and salary presumption), §154.062 (net resources), §154.125 (percentages), §154.122 and §154.123 (presumption and factors), and §154.130 (findings).
• Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011) at CourtListener.
• IRS, tax year 2026 inflation adjustments at irs.gov, for the standard deduction, brackets, and personal exemption.
• Social Security Administration, contribution and benefit base at ssa.gov, for the 6.2% and 1.45% rates.
• U.S. Department of Labor, minimum wage at dol.gov, for the $7.25 federal minimum wage.
• Tex. Gov’t Code §81.101 at statutes.capitol.texas.gov. Subsection (c) is why this post, and our calculator, state that they are not a substitute for the advice of an attorney.

Statutes reviewed 2026-10-09 on statutes.capitol.texas.gov, which reports its contents current through the 89th Legislature, 2nd Called Session, 2025.