Federal law caps most wage garnishments at 25% of an employee’s disposable earnings, but a child support order can take up to 60% of disposable earnings, or 65% if the support is more than 12 weeks behind, according to the U.S. Department of Labor. That gap is the reason garnishments cause so many payroll mistakes. The amount you withhold depends on the type of order, the employee’s pay, and the state where the employee works.
This guide explains the types of garnishments, how to calculate disposable earnings, the current limits, the deadlines you must meet, and how to set up payroll so each order is handled correctly. It also covers what changed in 2026.
What Is a Wage Garnishment?
A wage garnishment is a legal process that requires an employer to withhold part of an employee’s earnings to pay a debt. Most garnishments come from a court order. Some come from a government agency, such as a child support agency, the IRS, or a state tax agency, without a court order.
You are not the one who owes the debt. Your job is to follow the order, take the right amount, and send it to the right place on time. If you get it wrong, you can be held responsible for the money you should have withheld.
What Types of Wage Garnishments Do Employers Handle?
- Child support and alimony. These usually arrive as an Income Withholding for Support (IWO) notice from a state child support agency or a court. They have the highest priority and the highest limits.
- Creditor garnishments. A court issues these after a creditor wins a judgment for a debt such as a credit card, medical bill, or personal loan. They are called ordinary garnishments.
- Federal tax levies. The IRS sends Form 668-W when an employee owes federal taxes. No court order is needed.
- State tax levies. State tax agencies can also order you to withhold wages, and their rules vary.
- Federal student loan garnishments. For a defaulted federal student loan, the government can order withholding without going to court. This is called administrative wage garnishment.
- Bankruptcy orders. A Chapter 13 bankruptcy court order can require you to send part of an employee’s pay to a trustee.
What Is the Status of Student Loan Garnishments in 2026?
The Department of Education began sending notices in January 2026 and then paused involuntary collections, including wage garnishment, on January 16, 2026. As of late summer 2026, reports say it had not announced a restart date. The authority to garnish has not gone away, so you may receive an order with little warning. Check the Department’s current status before you act on a notice, and process any valid order you receive.
How Do You Calculate Disposable Earnings?
The garnishment limits are based on disposable earnings, not gross pay. Disposable earnings are what is left after legally required deductions are taken out. The DOL says these include federal, state, and local income taxes, the employee’s Social Security and Medicare taxes, state unemployment insurance taxes if withheld from pay, and contributions to state employee retirement systems that the law requires.
Voluntary deductions do not count. You cannot subtract health insurance premiums, voluntary 401(k) contributions, union dues, or other optional deductions when you figure disposable earnings.
Earnings include wages, salary, commissions, bonuses, and other pay for personal services. DOL guidance also treats lump sum payments as earnings. For tipped employees, the DOL counts the cash wages plus the tip credit you claim. Gratuities left by customers are not counted.
Here is an example. Maria earns $900 a week.
- Federal income tax: $90.00
- State income tax: $30.00
- Social Security (6.2%): $55.80
- Medicare (1.45%): $13.05
- Legally required deductions: $188.85
- Disposable earnings: $900 – $188.85 = $711.15
Maria also pays $40 for health insurance and $50 into her 401(k). Neither reduces her disposable earnings for this purpose.
What Are the Federal Garnishment Limits?
The limits come from Title III of the Consumer Credit Protection Act. Where state law gives the employee more protection, the state rule applies.
What Is the Limit for Ordinary Creditor Garnishments?
You may withhold the lesser of two amounts each pay period:
- 25% of disposable earnings, or
- The amount by which disposable earnings are more than 30 times the federal minimum wage.
The federal minimum wage is still $7.25, so 30 times that is $217.50 a week. If pay periods are longer than a week, use multiples of the weekly amounts. The DOL’s table shows these floors:
- Weekly: $217.50
- Biweekly: $435.00
- Semimonthly: $471.25
- Monthly: $942.50
If disposable earnings are at or below the floor, you withhold nothing. Here are two examples for a weekly pay period.
- Disposable earnings of $500: 25% is $125. The amount above $217.50 is $282.50. You withhold the lesser amount, which is $125.
- Disposable earnings of $250: 25% is $62.50. The amount above $217.50 is $32.50. You withhold the lesser amount, which is $32.50.
Using Maria’s $711.15 from above, 25% is $177.79, and the amount above $217.50 is $493.65. The limit is $177.79 a week.
The limit applies per pay period no matter how many ordinary orders you receive. It is not per order.
What Is the Limit for Child Support and Alimony?
Support orders can take much more. The federal limits are:
- 50% of disposable earnings if the employee supports another spouse or child.
- 60% if the employee does not.
- An extra 5% (55% or 65% in total) if the support is more than 12 weeks past due.
For example, an employee has weekly disposable earnings of $800 and supports a new child. The limit is 50%, or $400. If the support is more than 12 weeks behind, the limit is 55%, or $440. If the employee has no other dependents, the limits are $480 and $520.
The order or IWO tells you the exact amount or percentage to withhold. You may never withhold more than the federal limit or the limit in the employee’s work state, whichever is lower.
What Is the Limit for Federal Student Loans?
Administrative wage garnishment for a defaulted federal student loan is limited to 15% of disposable pay. It is also subject to the same minimum-wage floor as ordinary garnishments. On $600 of weekly disposable pay, the most you would withhold is $90.
How Do Federal Tax Levies Work?
The 25% cap does not apply to tax levies. Instead, the IRS lets the employee keep an exempt amount, and you send the rest. The exempt amount depends on the employee’s filing status, number of dependents, and the standard deduction, and you find it in IRS Publication 1494. The IRS issued the 2026 table with higher exempt amounts than 2025, so use the 2026 version.
When you receive a levy, give the employee the Statement of Dependents and Filing Status, which is part of Form 668-W. The IRS says the employee has three days to return it. If the employee does not return it, the exempt amount is figured as if the employee is married filing separately with no dependents. You can read the details on the IRS page about wage levies.
Do State Laws Change the Limits?
Yes. The DOL says that if a state law differs from the federal law, the one that results in the smaller garnishment applies. Some states set lower percentages or higher protected amounts. A few, including Texas, Pennsylvania, North Carolina, and South Carolina, largely bar wage garnishment for ordinary consumer debts. Support orders and tax levies are treated differently, so check the rules for the state where the employee works.
What Happens When You Have More Than One Order?
When orders overlap, use this general order and confirm with the issuing agencies if you are unsure:
- Support orders come first. Child support has priority over other garnishments. If a support order already takes 25% or more of disposable earnings, you cannot withhold anything more for an ordinary creditor.
- Tax levies generally take priority over later ordinary garnishments, and they follow the IRS or state agency’s own rules.
- Other orders usually follow the order in which you received them, unless state law says otherwise.
The DOL gives an example. An employee has $370 in weekly disposable earnings, and $140 is already withheld for child support. Twenty-five percent of $370 is $92.50. Because $140 is already more than that, nothing more may be withheld for a consumer debt.
If you receive multiple support orders and cannot pay them all in full, follow the allocation method required by the employee’s work state. Many states split the money proportionally.
What Are the Steps to Process a Garnishment?
Check the Order
Confirm that it identifies the right employee, comes from a real court or agency, and states the amount and where to send payment. If something looks wrong, contact the sender before you act.
Identify the Type and the Employee’s Work State
The type of order decides the limit and the deadline. The work state decides which state rules apply.
Notify the Employee
Give the employee a copy of the order or notice if the law requires it, and explain what will change on their paycheck. For tax levies, give them the required statement.
Calculate Disposable Earnings and the Limit
Use the steps above. Compare the amount in the order with the legal limit and withhold the lesser amount.
Start Withholding on Time
Start with the first pay period that meets the order’s deadline. See the deadlines section below.
Send the Money and the Required Data
Send payment to the address or state payment unit listed on the order. Include the case number, employee name, and pay date, as the order requires. You may combine payments for several employees in one payment to a child support unit if you list each employee’s share separately.
Keep Records
Record the order, the date you received it, the amounts withheld, and each payment. Keep copies with the employee’s payroll file.
Stop When the Order Ends
Stop only when the sender tells you to, the balance is paid, or the order expires. Do not stop on your own or because the employee asks.
What Are the Garnishment Deadlines?
- Child support IWO. You must generally start withholding no later than the first pay period that begins after 14 days from the date of the order or notice. Some states require it sooner. Michigan, for example, uses 7 days after service.
- Sending payments. The federal IWO form says to send child support to the state disbursement unit within 7 business days after the pay date, or sooner if state law requires. Some states use 3 business days.
- Tax levies. The levy takes effect when you receive it, and you must send the levied amount as the notice directs.
- Court writs. Respond by the date on the writ, since courts can enter a judgment against an employer that does not answer.
- Ending employment. If an employee leaves, notify the issuing agency. The federal IWO form allows employers to report a termination through the OCSE Child Support Portal or the form itself.
See the federal Income Withholding for Support form for the exact language on withholding, payment timing, lump sums, and liability. The form says you may need to tell the sender about upcoming lump sum payments such as bonuses, commissions, or severance.
How Should You Set Up Garnishments in Payroll Software?
- Use post-tax deduction codes. Garnishments come out after taxes, and they do not reduce taxable wages. Taxes are still calculated on gross pay, and the W-2 reports full wages.
- Set the priority order. Support first, then tax levies, then other orders, and enter the case numbers.
- Add caps. Enter the limit rule and the total balance where the order has one, so the system stops at the right amount.
- Track fees. Some states let you charge the employee a small processing fee. Set it up only if state law allows it and the order does not forbid it.
- Check final and off-cycle pay. Bonuses, commissions, and final paychecks are earnings, so the garnishment applies to them too.
- Test after every change. New orders, pay changes, and a move to another state can change the limit.
A payroll compliance checklist can help you review these settings each quarter. If your employee data and payroll live in different tools, HR & payroll solutions that keep them together make it easier to catch a work state change.
What Are the Penalties for Getting It Wrong?
- You owe the money. If you do not withhold as the order directs, you are liable for the amount you should have withheld, plus any penalties set by state or tribal law.
- Anti-retaliation fines. Federal support forms warn that you are subject to a fine under state law if you fire, refuse to hire, or discipline an employee because of an income withholding order.
- Court contempt. Courts can hold an employer in contempt for ignoring an order.
- Over-withholding. Taking more than the legal limit can lead to wage claims and refunds.
Which Businesses Face Special Garnishment Issues?
- Financial services. Advisors and lenders often earn large commissions and bonuses, which count as earnings and can be subject to a garnishment, especially if they arrive as lump sums. Payroll software for financial services can flag those payments.
- Hospitality. Tipped employees and high turnover create extra work. Each new employer must process a new order, and old employers must report terminations. See payroll software for hospitality businesses that handles tip credits and pay changes.
- Retail. Seasonal hires and multi-state stores mean more orders and more state rules. See retail payroll software with location-based rules.
- Manufacturing. Overtime and shift differentials change disposable earnings from week to week. Payroll software for manufacturing businesses recalculates the limit each pay period.
- Cannabis. Employers with limited banking access still must send garnishment payments on time. Cannabis payroll software built for those limits can help you plan payments.
What Are the Most Common Garnishment Mistakes?
- Using gross pay instead of disposable earnings.
- Subtracting voluntary deductions like health insurance.
- Applying the 25% limit to a support order.
- Missing the start date on an income withholding order.
- Paying late or to the wrong address.
- Stopping withholding when the employee leaves without notifying the agency.
- Ignoring a state rule that is stricter than the federal rule.
- Forgetting to apply the order to bonuses and final pay.
Frequently Asked Questions
Can I fire an employee because of a garnishment?
Federal law prohibits firing an employee because their earnings are garnished for any one debt. The DOL notes that this protection covers one debt and does not extend to multiple debts, but many states protect employees more. For child support, federal and state rules also bar discharge or discipline, and you can be fined.
Can I charge a fee for processing a garnishment?
Only if your state allows it. Some states let employers deduct a small fee from the employee’s pay for each garnishment, and others do not. Check the state rule and the order first, and never take more than the law allows.
What should I do if I receive an order for someone who does not work for me?
Do not ignore it. Complete the response or termination section of the order, or use the sender’s online portal, and return it by the date shown. For child support, the federal form allows you to report that the person never worked for you.
Do garnishments apply to independent contractors?
Garnishment limits apply to earnings of employees. Payments to a true independent contractor are treated differently and can be subject to a different process, such as a bank levy or a tax levy. If you receive an order for a contractor, ask the sender or an attorney what applies.
What if my employee disputes the garnishment?
You cannot decide that. Keep withholding as the order says and tell the employee to contact the court or agency that issued it. Only the issuing court or agency can change or stop an order.
What happens to the garnishment if an employee quits?
Withhold from any final pay that is still owed, including accrued time off you pay out. Then notify the issuing agency that the employee has left and give the last known address if you have it. The new employer will receive its own order.
Conclusion
Wage garnishments follow strict federal and state limits. Start with disposable earnings, use the lower of the order and the legal limit, and follow the deadlines for starting withholding and sending payment. Support orders take the most and go first, tax levies follow the IRS exempt amount table, and student loan garnishments are capped at 15% but were paused in 2026. Set up each order in your payroll system with the case number, the priority, and the cap, and review your setup whenever an employee changes pay or state.
