Wage garnishment lines on a pay stub

A garnishment line is different from every other deduction on a stub. You did not elect it, and in most cases your employer did not choose it either. Payroll received an order — from a court, a child support agency, the Department of Education, or the IRS — and is legally required to withhold from your pay and send it on. If payroll ignores a valid order, the employer can become liable for the debt.

What payroll controls is the arithmetic, and federal law sets the frame for it.

The federal ceiling

Title III of the Consumer Credit Protection Act, explained in the Department of Labor's Fact Sheet #30, limits ordinary garnishments (consumer debts such as credit cards or medical bills, after a court judgment) to the lesser of:

1. 25% of disposable earnings, or
2. the amount by which disposable earnings exceed 30 times the federal minimum wage.

The federal minimum wage is $7.25 an hour, so 30 times that is $217.50 a week. For a biweekly paycheck, payroll doubles it: $435.00.

Disposable earnings is not net pay

Disposable earnings means pay after legally required deductions: federal, state and local income tax, Social Security and Medicare, and state-mandated items. Voluntary deductions — health premiums, retirement contributions, voluntary benefits, union dues in most cases — are not subtracted. That catches people out: your disposable earnings are usually higher than your take-home.

Worked on the illustrative stub

Step	Amount
Gross pay	$2,658.00
Minus federal withholding	−$201.30
Minus Social Security	−$158.84
Minus Medicare	−$37.15
Minus state tax	−$98.40
Disposable earnings	$2,162.31
Test 1: 25% of disposable	$540.58
Test 2: disposable − $435.00	$1,727.31
Federal ceiling (lesser)	$540.58

The health premium and voluntary benefits on the full stub stay in the calculation, because they are voluntary. The $75.00 actually withheld is well under the ceiling, which is common: the order sets the amount, and the ceiling only matters when the order asks for more.

Test 2 is what protects low earners. If disposable earnings for a week are $217.50 or less, ordinary garnishment takes nothing.

Different orders, different limits

The 25% ceiling is for ordinary debts. Other orders run under their own rules:

• Child support and alimony. Up to 50% of disposable earnings if you support another spouse or child, up to 60% if you do not, plus 5% more in either case if payments are 12 or more weeks in arrears (DOL Fact Sheet #30).
• Federal student loans in default. Administrative wage garnishment by the Department of Education can take up to 15% of disposable pay without a court order, after notice.
• IRS levies. These are not limited by the 25% rule. The IRS uses its own exempt-amount tables, published in Publication 1494, based on filing status and dependents.
• State rules. Many states protect more of a paycheck than federal law does, and some exempt certain debts entirely. Where state law is more protective, it applies.

When there is more than one order, priority and combined limits get technical. Child support generally comes first.

Reading the line itself

A garnishment line usually carries a label that hints at the type: Garnish, Levy, Child Supp, AWG, or a case number. Things worth checking on every stub:

• Is the amount the same as the order? Fixed-amount orders should match exactly; percentage orders should move with your pay.
• Did it stop when it should? An order ends when the debt is paid or released. Keep a running total against the balance and tell payroll when you get a satisfaction or release.
• Is there an extra fee line? Some states let employers charge a small administrative fee per garnishment. It should be a separate, small line, if it exists at all.

What a garnishment does not change

The garnishment comes out after tax. It does not lower your taxable wages, your W-2 Box 1, or your withholding. A $75.00 garnishment reduces net pay by exactly $75.00, with no tax offset.

If the line looks wrong

Ask payroll for a copy of the order and their calculation sheet. If the math exceeds the limits above, or you believe the debt is paid, the court or agency that issued the order is where the dispute goes; payroll will usually keep withholding until it hears from them. Your state labor department and the Department of Labor's Wage and Hour Division handle complaints about the federal limits.

For the deductions that come out before tax and change your taxable wages, see voluntary benefits and every line on a pay stub.