A wage garnishment reduces your gross wages, and ultimately your take-home pay. So, if have a wage garnishment against you, make sure your employer is deducting the correct amount.
The withholding amount for a wage garnishment depends on federal versus state law and the type of garnishment.
Below are deduction limits for the most common types of wage garnishments.
Consumer Debt Wage Garnishment
These are debts owed to a private creditor, such as for unpaid:
- Healthcare bills
- Credit card bills
- Rent
- Utility bills (Need assistance with utility bills? Click here)
- Personal loans from a bank, credit union, or other party
Title III of the Consumer Credit Protection Act (CCPA) sets the (federal) maximum employers can deduct for a consumer debt garnishment.
Specifically, your employer can withhold no more than the lesser of:
- 25% of your weekly disposable earnings; or,
- the amount by which your disposable earnings exceed 30 times the federal minimum wage, which is $7.25 per hour.
To arrive at your disposable earnings, subtract mandatory deductions — such as payroll taxes — from your gross wages.
For example, you earn $600 per week after mandatory deductions.
$600 x 25% = $150.
$7.25 by 30 = $217.50.
$217.50 – $600 = $382.50. This is the amount by which your disposable earnings exceed 30 times the federal minimum wage.
Since $150 is less than $382.50, your employer cannot deduct more than $150 from your weekly pay, for a consumer debt garnishment.
Some states require a lower amount than the CCPA. In this case, your employer must use the smaller amount.
Note: To garnish a debtor’s wages, private creditors must first obtain a court order.
Child Support and Alimony Income-Withholding Orders
Title III of the CCPA caps the amount an employer can withhold for child support and alimony.
For either child support or alimony, your employer can deduct up to 50% of your disposable earnings if you’re supporting another spouse or child, and up to 60% if you’re not.
If you’re more than 12 weeks behind on your child support or alimony payments, your employer can withhold an extra 5% until you’re caught up on those payments.
So, with arrears, up to 55% or 65% can be withheld from your pay, depending on whether you’re supporting another spouse or child.
As with consumer debt garnishments, make sure you check state law for applicable child support and alimony withholding limits. If the state requires a smaller amount than federal law, the lesser amount applies.
Note: Child support and alimony income-withholding orders are issued (to employers) by the state’s child support enforcement agency, after the custodial parent or the spouse has won a court judgment for support.
Student Loan Wage Garnishment
The Higher Education Act mandates the U.S. Department of Education to garnish up to 15% of a debtor’s disposable earnings to repay a delinquent federal student loan. The CCPA, as well, authorizes up to 15% for a federal student loan garnishment.
If your employer receives multiple federal student loan garnishments against you, they can withhold both garnishments simultaneously, as long as the combined total does not exceed the CCPA’s regular limit of 25% of your disposable earnings.
For private student loans, the regular CCPA limit (25%) or the state’s garnishment threshold applies, whichever is less.
Note: Federal student loan holders, such as the U.S. Department of Education, issue wage garnishments directly to the debtor’s employer. They do not need a court order to garnish wages, but they must provide you with advance notice of their intent to garnish. Conversely, private student loan holders cannot garnish wages unless they have a court order to do so.
If you’re struggling to pay off your student loans, call the Student Loan Relief and Private Student Loan Relief Helplines for assistance.
IRS Wage Levy
The Internal Revenue Service (IRS) can levy/garnish wages for delinquent federal taxes. To calculate how much to withhold for an IRS wage levy, your employer must use IRS Publication 1494 and your Statement of Dependent and Filing Status. Your employer is supposed to give you the statement to complete and return within three days. Your statement and Publication 1494 determine how much of your pay is exempt from levy.
Specifically, your employer subtracts your mandatory and existing voluntary deductions from your gross wages then deducts the amount exempt from the levy. Whatever is leftover goes to the IRS.
The agency provides a few exceptions for voluntary deductions. First, once the employer receives the IRS wage levy, they typically cannot allow the debtor/employee to incur new voluntary deductions. Second, amounts for voluntary deductions can be disregarded from the levy calculation “if they are so large, they defeat the levy.”
Note: The IRS does not need a court order to garnish wages, but they must give you advance notice of their intent to garnish.
State Tax Levy
The state revenue agency can levy your wages for delinquent state taxes. While the maximum withholding amount might vary by state, it cannot be more than 25% of the debtor’s disposable earnings.
Note: The state revenue agency does not need a court order to garnish for unpaid state taxes, but they must inform you of their intent to garnish.
Additional Considerations
- North Carolina, South Carolina, Pennsylvania, and Texas do not allow wage garnishment for consumer debts. However, wage garnishment for student loans, back taxes, child support, and alimony are permitted in those states.
- Some states — such as Illinois, Minnesota, and Nevada — have suspended wage garnishments, in light of the COVID-19 pandemic.
- In response to COVID-19, the (federal) CARES Act temporarily halted wage garnishments for certain federal student loans. This suspension period ran from March 13, 2020 to Sept. 30, 2020.
Do you need debt assistance? Call the Debt Relief Helpline at (888) 790-1337 to speak with a debt counselor.
Author Bio
Grace Ferguson is a business writer and blogger covering payroll, employee benefits, and human resources. She has vast experience serving as a payroll and benefits administrator for large and small businesses.
