What Are Disposable Earnings and Wage Garnishment Limits?

Disposable earnings and wage garnishment limits work together to set a ceiling on how much of your paycheck a creditor can take. Disposable earnings are what remains of your gross pay after your employer subtracts deductions the law requires — federal and state taxes, Social Security, and Medicare. Voluntary deductions like health insurance premiums, 401(k) contributions, and union dues stay in the calculation, so disposable earnings are usually higher than what you actually deposit. For most consumer debts, federal law caps garnishment at 25% of that figure, but the cap changes for child support, tax levies, and defaulted student loans.

Calculating Disposable Earnings

Disposable earnings equal your gross earnings minus only the deductions your employer is legally required to withhold.¹ The word “required” is the whole game. It separates what the government forces your employer to take from what you have elected to have taken.

Legally required deductions include federal income tax withheld under your W-4, state and local income taxes where they apply, your share of Social Security and Medicare, state unemployment insurance in states that require employee contributions, and any state-mandated retirement contribution.

Voluntary deductions do not reduce your disposable earnings, even though they reduce what hits your bank account.² Health insurance premiums, 401(k) contributions, life insurance, charitable giving, and union dues all stay in the pot when calculating how much a creditor can reach. The retirement contribution point trips people up most often. Unless your state requires you to contribute to a public pension system by law, your retirement savings are treated as voluntary, and disposable earnings are calculated as if those contributions did not exist.

Someone contributing 10% of their salary to a 401(k) will have disposable earnings substantially higher than what they see on payday. The garnishment bites into money already mentally allocated elsewhere.

Earnings themselves cover more than salary. Under the Consumer Credit Protection Act, earnings mean compensation paid for personal services: wages, salary, commissions, bonuses, and periodic pension or retirement payments.¹ Disability payments from an employer-sponsored plan also count.² Independent contractor payments do not — the CCPA applies to compensation an employer pays an employee, so a creditor pursuing a 1099 worker typically goes after a bank account instead.

The 25% Cap for Consumer Debts

For ordinary consumer debts (credit cards, medical bills, personal loans), the CCPA caps garnishment at the lesser of two amounts:³

25% of disposable earnings for the pay period, or
the amount by which disposable earnings exceed 30 times the federal minimum wage

The federal minimum wage is $7.25 per hour, which puts the weekly protected floor at $217.50.⁴ If weekly disposable earnings are $217.50 or less, nothing can be garnished. Above that, the employer applies whichever calculation leaves you with more money.

Say your weekly disposable earnings are $300. Twenty-five percent equals $75. The excess over $217.50 is $82.50. The employer garnishes $75, the smaller number. Now say your disposable earnings are $250. The 25% test yields $62.50, and the excess-over-floor test yields $32.50. The employer garnishes $32.50. The floor test protects more of your income at lower earnings levels; the 25% cap protects more at higher levels.

Thresholds for Non-Weekly Pay Periods

Most people are not paid weekly. The Department of Labor sets equivalent thresholds below which nothing can be garnished:²

Biweekly: $435.00 or less
Semimonthly: $471.25 or less
Monthly: $942.50 or less

Between the floor and the point where 25% takes over, the employer garnishes only the amount above the floor. That crossover happens at $580.00 biweekly, $628.33 semimonthly, and $1,256.66 monthly. Above those numbers, the garnishment is simply 25% of disposable earnings.

Higher Limits for Child Support and Alimony

Support orders play by different rules. The 30-times-minimum-wage floor does not apply, and the percentage limits are much higher.³ The maximum depends on whether you are currently supporting another spouse or dependent child, and whether you are behind on payments:

50% of disposable earnings if you are supporting a second spouse or dependent child
60% if you are not supporting anyone else
55% if supporting a second family and 12 or more weeks in arrears
65% if not supporting a second family and 12 or more weeks in arrears

At 65%, someone earning $1,000 in weekly disposable income would lose $650 to a support garnishment. Supporting a child is treated as a higher priority than protecting the debtor’s budget.

IRS Wage Levies

IRS levies are exempt from the CCPA limits entirely.³ The IRS uses its own exempt-amount calculation based on your filing status, number of dependents, and standard deduction. Your employer calculates it using IRS Publication 1494, which ships with the levy notice (Form 668-W).⁵

Everything above the exempt amount goes to the IRS. There is no percentage cap. If your exempt amount is $310 for the week and your disposable earnings are $1,500, the IRS takes $1,190. That is nearly 80% of the paycheck.

Federal Student Loans

Defaulted federal student loans have their own framework. Under the Higher Education Act, the Department of Education or a guaranty agency can garnish up to 15% of disposable pay without a court order through administrative wage garnishment.⁶ The rate is lower than the 25% consumer cap, but the process skips the court judgment. The agency starts it administratively after 30 days’ notice.

Before the garnishment begins, you have the right to inspect records on the debt, propose a voluntary repayment schedule, and request a hearing on whether the debt exists or the amount is correct. Miss the 30-day window and the garnishment starts. Reversing it after that is harder.

Multiple Garnishment Orders

When an employer receives more than one order, the total withheld still cannot exceed the applicable limits. Priority decides which creditor gets paid first. Child support generally comes first. If a support order is already consuming 50% of disposable earnings, a consumer creditor with a second order may receive nothing, because the combined total cannot exceed the legal maximums.

For federal student loan garnishments specifically, when a prior order is already in place, the Department of Education can only garnish the lesser of 15% or 25% of disposable pay minus what is already being withheld under the earlier order.⁷ A family support order arriving at any time takes priority even over an existing federal student loan garnishment.⁸

Bonuses and Lump-Sum Payments

Irregular payments — bonuses, commissions, severance pay, back-pay settlements — are subject to garnishment under the same rules as regular wages. The test is whether the payment was made in exchange for your personal services. If yes, it is earnings under the CCPA and the limits apply.² Reimbursements unrelated to services you performed, like educational expense reimbursements under IRS Code Section 127, are not earnings.

A $5,000 year-end bonus gets the same garnishment treatment as a regular paycheck. Your employer calculates disposable earnings on the bonus (gross minus mandatory withholdings) and applies the garnishment percentage to the result.

Job Protection Under Federal Law

Federal law prohibits your employer from firing you because your wages are being garnished for any single debt. Willful violation carries a fine of up to $1,000, up to one year in prison, or both.⁹ The Wage and Hour Division enforces it.

The word “single” carries the weight. The statute covers garnishment for one indebtedness. Once a second order from a different creditor arrives, federal law no longer shields your job. Some states extend stronger protection covering multiple garnishments, but the federal floor only covers one.

How State Law Can Change the Math

State garnishment laws must meet the federal floor but can offer more protection. When state and federal law conflict, your employer applies whichever rule results in the smaller garnishment.²

Four states effectively ban wage garnishment for consumer debts: Texas, Pennsylvania, North Carolina, and South Carolina. In those states, a creditor holding a judgment on a credit card balance, medical bill, or personal loan cannot touch your paycheck. The protection does not extend to child support, alimony, tax debts, or federal student loans, all of which can be garnished in every state. Creditors in those four states can still pursue bank account levies.

Other states offer enhanced protection through different mechanisms. Some use the state’s higher minimum wage instead of $7.25 when calculating the floor. Others apply a multiplier greater than 30, or cap garnishment at a lower percentage than 25%. Two employees earning the same salary can have very different amounts garnished depending on where they work. If you are facing an order, checking your state’s specific limits is the single most useful thing you can do. The federal rules are the minimum, not necessarily what applies to you.

1
Office of the Law Revision Counsel. 15 U.S. Code 1672 – Definitions
2
U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
3
Office of the Law Revision Counsel. 15 U.S. Code 1673 – Restriction on Garnishment
4
U.S. Department of Labor. Minimum Wage
5
Internal Revenue Service. What if I Get a Levy Against One of My Employees, Vendors, Customers or Other Third Parties
6
Office of the Law Revision Counsel. 20 U.S. Code 1095a – Wage Garnishment Requirement
7
eCFR. 34 CFR Part 34 – Administrative Wage Garnishment
8
eCFR. 34 CFR 34.20 – Amount To Be Withheld Under Multiple Garnishment Orders
9
Office of the Law Revision Counsel. 15 U.S. Code 1674 – Restriction on Discharge From Employment by Reason of Garnishment