Alimony Buyout Calculator
Find the present value of a future alimony stream — the lump sum that is mathematically equivalent to your scheduled payments at a given discount rate. Use it before negotiating or evaluating a buyout offer.
Buyout Summary
Evaluate an Offer
Already have a specific lump-sum offer? Enter it below — using the same payment and years above — and we'll back-calculate the discount rate the offer implies. A higher implied rate means the buyer is getting a better deal at your expense.
How alimony buyouts work
A lump-sum alimony buyout — also called a spousal support buyout or spousal support commutation — replaces a stream of future monthly payments with a single, immediate payment. Both parties may prefer this: the payor eliminates ongoing obligations and the risk of a modification hearing; the recipient gets certainty, liquidity, and no enforcement exposure.
The fair value of a buyout is the present value of the future payment stream — the amount of money that, invested today at a reasonable rate of return, would exactly fund all the scheduled payments. This calculator uses the standard annuity present-value formula:
PV = PMT × [ 1 − (1 + r)⁻ⁿ ] / r
Where PMT is the monthly payment, r is the monthly discount rate (annual rate ÷ 12), and n is the total number of monthly payments. The result is the lump sum at which neither party gains or loses in purely financial terms.
Frequently asked questions
What discount rate should I use?
The discount rate reflects the annual return the recipient could earn on a lump sum invested at comparable risk. Courts often anchor to prevailing Treasury note yields or investment-grade bond rates — typically 4–6% in recent years. A higher rate produces a smaller present value (benefiting the payor); a lower rate produces a larger present value (benefiting the recipient). Both parties should agree on the rate before presenting a figure; if you can't agree, use the current 10-year Treasury yield as a neutral starting point.
Does a buyout release the payor from all future obligations?
Only if the court approves it as a full commutation and issues a modified order. An informal agreement between the parties is not self-executing — the payor needs a court order to actually terminate the alimony obligation. In most states, alimony can be modified or terminated by the court on changed circumstances regardless of a private agreement, so a court-approved lump-sum order is the only way to achieve finality.
How is a lump-sum buyout taxed?
Under the Tax Cuts and Jobs Act (TCJA), for divorce agreements executed after December 31, 2018, alimony payments (periodic or lump sum) are neither deductible by the payor nor includible in the recipient's income. For pre-2019 agreements that haven't been modified to adopt the new rules, periodic payments may still be deductible/includible, but lump-sum buyouts are treated differently — consult a tax attorney or CPA before finalizing any pre-2019 modification that converts periodic to lump-sum.
Can I use this for other recurring payment streams?
Yes — the present-value math is identical for any level, fixed-term payment stream: pension buyouts, child support buyouts (less common), or any court-ordered annuity. Use the annuity value solver for non-monthly frequencies or irregular payment schedules.
What happens if alimony is modified before the term ends?
Modifiable alimony introduces uncertainty that reduces the present value of the stream — the payor could theoretically petition for reduction on changed circumstances (loss of income, recipient's cohabitation, etc.) before the term expires. A lump-sum buyout eliminates this risk for the recipient. If you are the recipient, factor in modification risk when deciding whether to accept a buyout: in volatile income situations, locking in today's value may be worth accepting a slight discount to fair value.