Wage Garnishment Compliance: Caps, Priority, Timing, and Fees

A garnishment is the one deduction on the payroll register that the employer did not choose and the employee did not authorize. A court, a child support agency, the IRS, a state revenue department, or the Department of Education has ordered the employer to withhold money and send it somewhere else. The employer is the middle party, and the rules that govern how much, in what order, how fast, and at what cost fall on payroll.

Getting a garnishment wrong is expensive in a way most payroll errors are not. Withhold too little and the employer can be liable for the shortfall; too much and the employee has a wage claim; miss an order and the creditor can pursue the employer for the debt. This guide sets out the rules, where the figures come from, and how to test every garnishment on every payroll before it processes.

Figures below that change annually or vary by state are flagged. Confirm them against the current federal and state notices before using them as audit thresholds.

What counts as a garnishment

Payroll systems tend to file these under one deduction category, but they are different legal instruments with different rules:

• Creditor garnishments. A court judgment for consumer debt, medical debt, or a civil claim, served on the employer as a writ or order of garnishment. Governed by the federal Consumer Credit Protection Act (CCPA) and, more restrictively in many places, state law.
• Child support income withholding orders (IWOs). Issued by a state child support agency or a court on the standard federal IWO form. These have their own caps, their own timing rules, and priority over almost everything else.
• Federal tax levies. Served by the IRS on Form 668-W. The amount withheld is not a percentage; it is everything above an exempt amount from IRS tables.
• State tax levies. Served by a state revenue department, with caps set by that state.
• Federal student loan administrative wage garnishment. Issued by the Department of Education or a guaranty agency without a court order, capped at a percentage of disposable earnings.
• Bankruptcy orders. A Chapter 13 trustee's order directs the employer to withhold plan payments. These generally stop other creditor garnishments, but not child support.

Voluntary wage assignments, where the employee has agreed to a deduction, are not garnishments and are not covered by the CCPA caps, though state law may regulate them separately.

Disposable earnings

Every cap in this guide is a percentage of disposable earnings, and disposable earnings has a precise meaning under the CCPA. It is gross pay minus deductions required by law:

• Federal income tax
• State and local income tax
• Social Security and Medicare
• State unemployment or disability contributions where the employee is required to pay them
• Contributions to a retirement system that the law requires the employee to make, such as some public employee plans

Nothing else comes out. In particular, these do not reduce disposable earnings even though they reduce net pay:

• Voluntary 401(k), 403(b), and other retirement contributions, including Roth
• Health, dental, vision, and life insurance premiums
• Union dues
• Charitable contributions
• Direct deposit splits and loan repayments
• Other garnishments already in place

The practical consequence is that a register net pay figure is never the right base. An audit has to compute disposable earnings from gross and the statutory tax lines, then apply the cap to that number.

Some states use a broader definition for their own caps, treating certain health or retirement deductions as required. Where state law is more protective of the employee, the state rule applies. Treat the state definition as something to verify per state rather than assume.

The caps

3.1 Ordinary creditor garnishments (CCPA Title III)

The federal cap is the lesser of:

• 25 percent of disposable earnings for the week, or
• The amount by which weekly disposable earnings exceed 30 times the federal minimum wage. At 7.25 dollars per hour, that is 217.50 dollars per week.

For pay periods other than weekly, the 30-times figure scales: 435.00 dollars biweekly, 471.25 dollars semimonthly, 942.50 dollars monthly. An employee whose weekly disposable earnings are 217.50 dollars or less has nothing available for a creditor garnishment.

These figures are the ones the Department of Labor publishes in Fact Sheet 30 and they move only if the federal minimum wage changes. Where a state rule protects more of the employee's pay, the rule that leaves less to garnish governs.

3.2 Child support

Support orders have higher caps under the CCPA because they are not consumer debt:

• 50 percent of disposable earnings if the employee is supporting another spouse or child who is not the subject of the order
• 60 percent if the employee is not supporting another spouse or child
• An additional 5 percent on top of either figure, so 55 or 65 percent, if the employee is more than 12 weeks in arrears

The order itself will state which cap applies. States may set lower caps and many do. Flagged: verify the cap on the order and the state rule.

3.3 Federal tax levies

An IRS levy does not use a percentage. The employer withholds everything above an exempt amount that depends on the employee's filing status, pay frequency, and number of dependents claimed on the Statement of Exemptions the employee returns with the levy. The exempt amounts are published each year in IRS Publication 1494. If the employee does not return the statement within three days, the exempt amount is figured as married filing separately with zero dependents, which produces the lowest exempt amount and the highest withholding.

Publication 1494 is reissued annually; the December 2025 revision carries the 2026 tables. The exempt amount applies to take-home pay, not gross.

3.4 Federal student loan administrative wage garnishment

Capped at 15 percent of disposable pay, or the amount above 30 times the federal minimum wage if that is lower. The authority is section 488A of the Higher Education Act, not the CCPA, but the disposable pay definition is the same. The borrower receives at least 30 days notice and a hearing right before withholding starts.

3.5 State law is often stricter

The CCPA sets a ceiling, not a floor. States can protect more of an employee's wages and several do:

• Texas, Pennsylvania, North Carolina, and South Carolina prohibit or severely restrict wage garnishment for ordinary consumer debt, while still allowing support, tax, and student loan withholding.
• New York caps an income execution at 10 percent of gross income and no more than 25 percent of disposable earnings, and sets the floor at 30 times the greater of the federal or the state minimum wage (CPLR 5231).
• Several other states also use a multiple of the state minimum wage rather than the federal figure, which raises the floor wherever the state minimum is higher.
• Some states impose a lower percentage for heads of household.

The Texas, Pennsylvania, North Carolina, and South Carolina entries are from general practice and should be confirmed against each state's current statute. The audit should carry a per-state cap table maintained by whoever owns payroll compliance.

Priority and stacking

When an employee has more than one order, the order in which they are applied matters, because each order's cap is applied to what remains within the combined limit. The CCPA itself sets no priorities; the Department of Labor's regulation says priority is determined by state law or other federal law. The rules below are those other laws.

Child support first. Federal child support law requires the employer to withhold support before all other garnishments, with one exception: an IRS tax levy entered before the date the underlying child support order was established keeps its place ahead of it. In practice, treat support as first unless the levy paperwork clearly predates the support order.

Federal tax levies next. After support, an IRS levy is applied before creditor garnishments, using its exempt amount rather than a percentage.

Creditor garnishments by date received. Under most state laws, the first creditor order served is satisfied first, and only one creditor garnishment can be active at a time; a second waits until the first is paid in full or expires.

Combined caps. The CCPA cap for the category applies to the total of all orders in that category. If a support order takes 50 percent of disposable earnings, a creditor garnishment cannot take a further 25 percent, because the total for all garnishments subject to the CCPA is limited to the higher support cap. Where the orders together exceed what can lawfully be withheld:

1. Withhold up to the cap in priority order.
2. Send what was withheld to the orders in that order, partially satisfying the last one reached.
3. Notify the issuer of any order that received less than the ordered amount, in writing, stating the reason.
4. Keep the shortfall notice with the order file; it is the employer's defence if the creditor claims non-compliance.

Multiple support orders for different families are allocated within the support cap by the method the state agency states on the orders.

Timing

Implementation. The federal IWO form directs the employer to begin withholding no later than the first pay period that occurs 14 working days after the date the order was received. Working days exclude weekends and holidays. The receipt date should be recorded the day the order arrives, because the deadline runs from receipt, not from when payroll opens the envelope.

Remittance. Withheld support must be sent to the state disbursement unit within 7 business days of the pay date on which it was withheld, and the state where the employee works may set a shorter limit. Creditor garnishments and levies carry their own remittance instructions on the order.

Response to the order. Most orders require the employer to acknowledge receipt within a set number of days and to state whether the employee is employed. A federal tax levy requires the employer to give the employee the Statement of Dependents and Filing Status and return it.

Termination. When an employee with an active IWO leaves, the employer must notify the child support agency of the termination date, last known address, and new employer if known, using the section on the IWO form. Levies and creditor orders generally require similar notice.

Lump sums. Bonuses, severance, and commissions can be subject to support withholding, and some states require lump sums above a threshold to be reported to the agency before payment; state-specific.

Employer administrative fees

Some states permit the employer to deduct a small fee from the employee's pay for the cost of processing a garnishment. The rules vary widely: a flat amount per payment, a flat amount per order, a percentage with a cap, or nothing at all. The federal IWO form permits the employer to deduct a fee for administrative costs only as allowed by the state of the employee's principal place of employment. Several states allow a few dollars per payment for support orders, some allow a one-time fee per creditor order, and a number prohibit any fee; confirm the figure for each state where you have employees.

Two rules hold everywhere. The fee is limited to what the state allows for that type of order, and it must not push the total withheld above the cap for the order. A fee line on the register that exceeds the state allowance, or that appears in a state that allows none, is a compliance finding.

Employee protections

The CCPA prohibits discharging an employee because their wages have been garnished for any one debt, however many times the employer has been served for that debt. Many states extend the protection to multiple debts, and support orders carry their own anti-retaliation provisions. A termination shortly after a new order is worth a second look by HR. Garnishment details are also confidential: the register line description should not disclose the nature of the debt to anyone who sees a pay statement or a departmental report.

Auditing garnishments every pay cycle

Garnishments belong in the preview audit, checked against the register before payroll processes. The tests are mechanical once the data is in place.

Data needed

From the payroll register, per employee per pay period: gross pay; federal, state, and local income tax; Social Security and Medicare; employee-paid state unemployment or disability contributions; every deduction line coded as garnishment, levy, support, or bankruptcy, with amount; any garnishment fee line.

From an orders table maintained by payroll, one row per order: employee, order type, date received, ordered amount or percentage, cap category (for support, whether the employee supports another family and whether arrears exceed 12 weeks), issuing agency and remittance address, status, and release date.

From the employee record: work state and termination date.

Checks

1. Every active order has a line. For each order with status active and receipt date at least 14 working days before the pay period start, there must be a deduction line for that employee with a matching code. An order with no line is the most serious finding on the list.
2. Every line has an order. Any garnishment-coded deduction with no active order on file is either an order that was never logged or a deduction that should have stopped.
3. Amount matches the order. Flat-amount orders should match to the cent. Percentage orders should match the percentage of computed disposable earnings.
4. Cap check. Compute disposable earnings as gross minus the statutory lines. Compute the applicable cap from the order type and the state. Flag any employee whose total garnishment withholding exceeds the cap, and any single order withheld above its own cap.
5. Priority check. Where an employee has more than one order, confirm support is satisfied first and that the combined total respects the higher cap rather than summing the caps.
6. Timing check. Orders received more than 14 working days before the period start with no line yet. Orders received inside the window are noted but not flagged.
7. Fee check. Fee lines above the state allowance, or present in a state that allows none.
8. Termination check. Employees with a termination date in or before the period who still have an active order, for agency notification, and whose final pay carries the correct withholding on the final wages.
9. Released orders still deducting. Orders with a release date before the period start that still have a line.
10. New codes. Garnishment codes appearing for the first time for an employee, cross-checked against the orders table.

Each check is a list of employees with the fields above and a reason column. The preparer clears each row by fixing the register, logging the missing order, or documenting why the line is correct.

How Praisidio helps

The garnishment checks are part of the preview payroll audit collection, which runs against the preview register rather than the last processed one. When payroll is moved to preview in ADP, the preview payroll connector is refreshed from Praisidio settings and the preview earnings, deductions, and statutory tax tables hold the run that is about to be paid. The audit compares that run to the last processed payroll for the same pay group and applies every check above to it.

The garnishment report lists every garnishment, levy, support, and bankruptcy line on the preview: employee, order code, amount, and the change from the last processed run, so a new line, a dropped line, or a changed amount is visible without opening the register. Disposable earnings are computed on the same report from gross pay minus the federal, state, and local tax lines and the employee-paid state contributions, and the CCPA cap for the order type is applied to that figure, so an over-withheld employee shows with the cap, the amount withheld, and the excess.

The orders themselves live in a small table that payroll uploads and maintains: employee, order type, date received, ordered amount or percentage, support cap category, status, and release date. That table is what makes the timing and amount tests possible. Orders received more than 14 working days ago with no line, lines with no order, flat amounts that do not match, and released orders still deducting each come out as their own list, with a reason column, so the preparer works one list at a time and refreshes the connector after fixes until every list is empty.

Because the queries, thresholds, and per-state figures are stored with the collection, the check is reproducible for any past pay date. An auditor can see what was compared, what the cap was, and what the register showed on the day it was processed. Scheduled delivery sends the exception lists to the preparer at the point in the payroll calendar when the preview is ready, so the review is prompted rather than remembered. The per-state cap table and fee allowances are configuration, updated once a year when the state and federal notices are published, instead of knowledge held by whoever handled garnishments last.

Cycle checklist

Before processing, confirm:

• Orders table updated with everything received, released, or satisfied since last cycle
• Every active order past its 14-working-day window has a deduction line
• Every garnishment-coded line traces to an active order
• Flat amounts match the order to the cent
• Disposable earnings computed from gross minus statutory taxes, not from net pay
• No employee withheld above the cap for their order type and state
• Multiple orders applied in priority order, support first
• No fee line above the state allowance
• Terminated employees with active orders queued for agency notification
• Remittance for last cycle's support withholding sent within 7 business days of pay date

Frequently asked questions