Wage Garnishment: An Employer's Guide for 2026

A wage garnishment is a legal order requiring an employer to withhold part of an employee's pay and send it to a creditor or government agency until a debt is paid. As the employer, you are not a party to the debt, but you are legally responsible for following the order exactly: withholding the right amount, paying it on time and protecting the employee from retaliation. Federal law caps ordinary garnishments at 25% of disposable earnings, and different limits apply to child support, taxes and federal debts.

This guide explains each type of wage garnishment, the federal limits and how to calculate them, the priority rules when several orders arrive, a worked example, and the step-by-step process for handling an order. It is general information, not legal advice; state garnishment laws vary, so check the rules in the state where the employee works.

Types of wage garnishment

Type	Who issues it	Federal limit on withholding
Ordinary creditor garnishment	Court, after a creditor wins a judgment	Lesser of 25% of disposable earnings or amount above 30x federal minimum wage per week
Child support and alimony	Court or state child support agency (Income Withholding for Support order)	50% if supporting another spouse or child, 60% if not; plus 5% if arrears are over 12 weeks
Federal tax levy	IRS (Form 668-W)	All pay above an exempt amount set by IRS tables
State tax levy	State revenue agency	Set by state law
Federal student loans and other federal debts	Federal agency through administrative wage garnishment	Up to 15% of disposable earnings
Bankruptcy (Chapter 13)	Bankruptcy court	As specified in the order

The Department of Labor's Fact Sheet #30 on the Consumer Credit Protection Act sets out the federal limits. Where a state law results in a smaller garnishment, you must follow the state law.

How to calculate disposable earnings

Start with gross earnings for the pay period: wages, salary, commissions, bonuses. Subtract only deductions required by law:

• Federal, state and local income tax withholding.
• Social Security and Medicare taxes.
• State-mandated unemployment, disability or family leave contributions.

Do not subtract voluntary deductions such as health insurance, 401(k) contributions or union dues, unless state law or a specific order says otherwise. Our guide to employer payroll taxes explains each tax line.

Worked example: an ordinary creditor garnishment

Illustrative figures for an employee paid weekly, subject to a judgment creditor's garnishment:

Step	Calculation	Amount
Gross weekly pay	40 hours x $20.00	$800.00
Federal income tax	Per W-4	-$58.00
Social Security and Medicare	7.65% of $800	-$61.20
State income tax	Example rate	-$30.80
Disposable earnings		$650.00
Test 1: 25% of disposable earnings	$650 x 25%	$162.50
Test 2: disposable earnings above $217.50	$650 - $217.50	$432.50
Maximum garnishment (lesser)		$162.50

Now a lower earner with $250 of weekly disposable earnings: 25% would be $62.50, but only $32.50 is above $217.50, so the maximum is $32.50. At $217.50 or less, nothing can be garnished for an ordinary debt. For other pay frequencies, the floor scales: $435 for biweekly pay, with the 25% cap applying from $580. The order itself may ask for less than the maximum; withhold the lower of the order amount and the legal limit.

Same employee, child support order

If instead the employee had a child support order and was not supporting another family, up to 60% of $650, or $390, could be withheld, and 65% ($422.50) if arrears were more than 12 weeks old. The order specifies the actual amount; the percentages are maximums.

Handling a garnishment order step by step

1. Check the order. Confirm it names your business and the employee, comes from a court or authorized agency, and note the deadlines.
2. Respond on time. Many court orders require an answer or employer's statement within a set number of days, even if the person no longer works for you.
3. Notify the employee and give them any copies the order requires.
4. Start withholding from the pay period specified. For child support, federal rules generally require withholding to begin no later than the first pay period after 14 days following the date the order was mailed, and payment within 7 business days of payday.
5. Calculate correctly each pay period, since disposable earnings change with hours, bonuses and overtime.
6. Remit payments to the payee named on the order, with the identifying case number.
7. Show the deduction clearly on the pay stub; see our pay stub template.
8. Stop only when you receive a release or satisfaction notice, or the order expires under state law.
9. Report terminations to the issuing agency or court when the employee leaves, if the order requires it.

If you run payroll in-house, build garnishments into your process; our guide on how to do payroll yourself covers the payroll cycle, and garnishments also follow employees to their final paycheck.

IRS wage levies

An IRS levy on wages arrives on Form 668-W. The employee completes a statement of filing status and dependents, and the employer uses IRS Publication 1494 to find the exempt amount, which the employee keeps. Everything above that amount goes to the IRS until the levy is released. If the employee does not return the statement, the exempt amount is calculated as if they were married filing separately with no dependents. Employers who fail to honor a levy can become liable for the amount plus a penalty.

Federal student loan garnishment in 2026

Federal agencies can use administrative wage garnishment without a court order, withholding up to 15% of disposable earnings. The Education Department said in late 2025 that it would restart wage garnishment for defaulted federal student loans in 2026 after a long pause, beginning with a small number of borrowers, as NPR reported. If you receive an administrative wage garnishment order, process it like any other: confirm it, respond, and withhold the amount stated, within the 15% cap and combined limits.

Multiple garnishments and priority

• Child support generally has priority over other garnishments.
• Federal tax levies take priority over later orders but not over child support orders received earlier.
• Ordinary creditor garnishments are usually handled first come, first served, and the combined amount cannot exceed the federal limit.
• Bankruptcy can stop other garnishments; follow the trustee's instructions.

When several orders conflict, document your calculation and ask the issuing agencies, your payroll provider or an attorney for guidance.

Garnishing bonuses, commissions and final pay

Garnishment orders usually apply to all earnings for personal services, which includes bonuses, commissions and vacation payouts. When a bonus is paid in a separate check, calculate disposable earnings for that payment, taking account of what was already withheld in the same period, and apply the limits. Expense reimbursements are not earnings and are generally not subject to wage garnishment. When the employee leaves, apply the order to the final paycheck and notify the issuing court or agency as the order requires.

Recordkeeping for garnishments

Keep a file for each order with the original document, your answer, the employee notices, each pay period's calculation, proof of each payment and the release when it arrives. Good records let you answer questions from the employee, the creditor or the agency quickly, and protect you if someone claims the wrong amount was withheld. Reconcile garnishment payments monthly, just as you would reconcile accounts payable, so a missed remittance is caught early.

Employee protections

Under the Consumer Credit Protection Act, you cannot fire an employee because their earnings are garnished for one debt. Many states go further. Keep garnishment information confidential, share it only with payroll staff who need it, and never comment on it in performance discussions.

Employees facing garnishment are often under real financial stress. Pointing them, without judgment, toward an employee assistance program if you have one, or simply explaining exactly how the deduction will appear on their pay stub, helps them plan and reduces questions to payroll. Never offer advice on the underlying debt or suggest they ignore the order; refer legal questions to the court, agency or their own adviser.

Common employer mistakes

• Ignoring an order because the employee says the debt is wrong. Disputes are between the employee and the creditor; you must follow the order until it is changed.
• Subtracting voluntary deductions before calculating disposable earnings, which understates the garnishment.
• Using the wrong frequency multiplier for biweekly or semimonthly pay.
• Exceeding combined limits when multiple orders apply.
• Missing the answer deadline on a court order.
• Applying a creditor garnishment to a contractor's invoices as if it were wages. Payments to independent contractors are usually reached through a different process, such as a levy or garnishment of accounts receivable; follow the order's wording.

When your business is the creditor

Wage garnishment also works the other way. If a customer owes your business money and will not pay, garnishment is one way to collect after you win a court judgment. Before that, most businesses work through reminders, a formal demand letter for payment and possibly a collection agency. Clear invoices with dates, terms and itemized charges make every one of those steps stronger, and our guide to invoice collections covers the process. If you are also considering when to give up on a debt, see bad debt write-offs.

The best protection against needing a court at all is billing clearly and promptly. Create professional invoices with our free invoice generator, with no sign-up, and download them as PDFs to send the same day the work is done.