The maximum amount that can be garnished from your paycheck for ordinary debts is determined by federal law, specifically Title III of the Consumer Credit Protection Act (CCPA), and is based on a calculation involving your disposable earnings and the federal minimum wage.
Understanding Disposable Earnings
Before calculating the garnishment limit, it's crucial to understand disposable earnings. These are the wages remaining after your employer makes legally required deductions from your gross pay. Legally required deductions typically include:
- Federal, state, and local income taxes
- Social Security contributions
- Medicare contributions
It's important to note that voluntary deductions, such as health insurance premiums, retirement plan contributions (like 401(k)s), or union dues, are generally not subtracted when calculating disposable earnings for garnishment purposes.
Federal Garnishment Limits for Ordinary Debts
For most ordinary commercial debts (e.g., credit card debt, medical bills, personal loans), federal law sets a limit on how much can be garnished from your paycheck. Your employer can garnish the lesser of two amounts:
- 25% of your disposable earnings for that workweek or pay period.
- The amount by which your disposable earnings exceed 30 times the current federal minimum wage.
As of the current date, the federal minimum wage is $7.25 per hour. You can find up-to-date information on the federal minimum wage from official sources like the U.S. Department of Labor.
The table below summarizes these federal limits:
| Calculation Factor | Rule |
|---|---|
| Percentage of Disposable Earnings | The maximum amount that can be garnished is 25% of your disposable earnings for that specific workweek or pay period. |
| Disposable Earnings vs. Federal Minimum Wage | The maximum amount that can be garnished is the amount by which your disposable earnings are greater than 30 times the federal minimum wage. If your disposable earnings are equal to or less than 30 times the federal minimum wage ($217.50 per week based on $7.25/hour x 30), then generally no ordinary garnishment is allowed. |
Practical Examples
Let's look at how these rules apply in different scenarios:
Example 1: Higher Disposable Earnings
Suppose your disposable earnings for a week are $500.
- Calculation 1 (25% Rule): 25% of $500 = $125
- Calculation 2 (Minimum Wage Rule):
- 30 times the federal minimum wage ($7.25/hour) = $217.50
- Amount above minimum wage threshold: $500 (disposable earnings) - $217.50 = $282.50
In this case, the lesser of $125 and $282.50 is $125. Therefore, the maximum amount that could be garnished from your paycheck is $125.
Example 2: Lower Disposable Earnings
Suppose your disposable earnings for a week are $250.
- Calculation 1 (25% Rule): 25% of $250 = $62.50
- Calculation 2 (Minimum Wage Rule):
- 30 times the federal minimum wage ($7.25/hour) = $217.50
- Amount above minimum wage threshold: $250 (disposable earnings) - $217.50 = $32.50
In this case, the lesser of $62.50 and $32.50 is $32.50. Therefore, the maximum amount that could be garnished from your paycheck is $32.50.
Important Considerations
- State Laws: While federal law sets a baseline, some states have their own wage garnishment laws that offer greater protection to employees. If a state law allows for less to be garnished than federal law, the state law takes precedence.
- Types of Debt: The limits discussed above primarily apply to ordinary commercial debts. Different rules and often higher garnishment limits can apply to specific types of debt, such as:
- Child support or alimony
- Defaulted federal student loans
- Unpaid federal taxes
