How to Calculate Disposable Earnings for Garnishment

To calculate disposable earnings for garnishment, start with your gross pay for the pay period and subtract only the deductions that federal, state, or local law requires your employer to withhold. That result — not your take-home pay — is the number a creditor uses to figure out how much of your check they can take. Voluntary deductions like health insurance premiums and 401(k) contributions do not lower it, even though they shrink the check you actually deposit.

Start With Gross Earnings

Your starting number is every dollar of compensation your employer paid you during the pay period. Federal law defines earnings broadly as any compensation for personal services, whether it shows up on your pay stub as wages, salary, commission, bonus, or something else.¹ Periodic payments from a pension or retirement program count too, and so do payments from an employment-based disability plan.²

Tipped workers have a narrower starting number. Only the cash wages your employer pays you directly, plus any tip credit the employer claims, are treated as earnings. Tips you receive above that amount are not subject to garnishment under this law.²

Subtract Only Legally Required Deductions

From that gross number, subtract the withholdings the law forces your employer to take out. Nothing else comes off.¹ The common mandatory items are:

Federal income tax withheld under your W-4.
State and local income taxes where they apply.
Social Security tax, 6.2% of covered wages up to the annual wage base.
Medicare tax, 1.45% of all covered wages, with an additional 0.9% on wages above $200,000.
State unemployment or disability insurance where a state requires it.
Mandatory retirement contributions, such as pension contributions required by law for public employees enrolled in a state retirement system.

These typically show up in the “statutory deductions” section of a pay stub.² The retirement line is where people slip. If your employer is legally required to withhold a pension contribution — common for teachers, firefighters, and other government workers — that amount does reduce disposable earnings. A voluntary 401(k) contribution does not, even if it comes out of your check automatically.

What Does Not Come Off

This is where take-home pay and disposable earnings part ways. Anything you chose to have deducted stays in the disposable-earnings pool and remains reachable by creditors, even though it reduces your actual paycheck.² Common examples:

Health and life insurance premiums, including employer-sponsored plans.
Voluntary retirement contributions such as 401(k), 403(b), and similar plans.
Union dues.
Charitable donations run through payroll.
Savings bond purchases and wage assignments.
Repayments to your employer for payroll advances or merchandise.

The law treats these as amounts you received and then chose to spend. If you look at your pay stub and see a “voluntary deductions” section, skip that column when doing the math.

A Worked Example

The calculation is a single subtraction. Here’s a biweekly worker:

Gross earnings: $2,400.00
Federal income tax: −$216.00
State income tax: −$96.00
Social Security (6.2%): −$148.80
Medicare (1.45%): −$34.80
Disposable earnings: $2,400.00 − $495.60 = $1,904.40

Say this worker also has $150 taken out for health insurance and $200 for a 401(k). Their actual paycheck is smaller, but disposable earnings stay at $1,904.40. That $1,904.40 is the figure a creditor works from.

How Creditors Apply the Number

For ordinary consumer debts — credit cards, medical bills, personal loans — federal law caps garnishment at the smaller of two amounts: 25% of disposable earnings for that pay period, or the amount by which disposable earnings exceed 30 times the federal minimum wage ($7.25 × 30 = $217.50 per week).³ If your weekly disposable earnings are $217.50 or less, no garnishment is allowed at all.²

The Department of Labor publishes multiplied thresholds for other pay frequencies. Biweekly, for example, no garnishment is allowed if disposable earnings are $435.00 or less, and the 25% cap governs at $580.00 or more.² The worker in the example above sits well above the biweekly threshold, so the 25% cap applies: $1,904.40 × 0.25 = $476.10 for that pay period.

Support Orders Use Higher Caps

Child support and alimony are not subject to the 25% ceiling. Federal law allows 50% of disposable earnings if you are supporting another spouse or dependent child, 60% if you are not, with an additional 5 percentage points added when the support is more than 12 weeks in arrears.⁴ The disposable-earnings number you calculated is still the base; only the percentage changes.

Federal Student Loans

Defaulted federal student loans use administrative garnishment, capped at the lesser of 15% of disposable earnings or the amount above 30 times the federal minimum wage.⁵ The percentage is lower, but the disposable-earnings figure feeding it is the same one you just calculated.

Tax Debts Are a Separate System

The consumer-debt and support caps do not apply to federal or state tax debts.⁴ The IRS uses its own exempt-amount formula tied to filing status and dependents, published each year in Publication 1494; anything above that exempt amount can be levied.⁶ If a tax levy is what you are dealing with, the disposable-earnings math above does not govern.

Check Your State Law

The federal calculation sets a ceiling, not a floor. Some states cap consumer-debt garnishment lower than 25%, and at least one bars wage garnishment for consumer debts altogether. When state law is more protective, your employer must follow the state rule. Run the federal calculation first, then confirm your state’s garnishment statute leaves the number where you have it.

1
Office of the Law Revision Counsel. 15 USC 1672 – Definitions
2
U.S. Department of Labor. Fact Sheet #30 – Wage Garnishment Protections of the Consumer Credit Protection Act (CCPA)
3
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
4
Office of the Law Revision Counsel. 15 USC 1673 – Restriction on Garnishment
5
eCFR. Title 34, Part 34 – Administrative Wage Garnishment
6
Office of the Law Revision Counsel. 26 USC 6334 – Property Exempt From Levy