Calculating Wage Garnishments
This calculator can be used estimate the amount of wages subject to garnishment, including student and education loans. The calculator needs a total of ten inputs, including:
- Paycheck frequency, including choices of weekly, biweekly (every two weeks), semi-monthly (twice a month), or monthly
- Gross pay, which is the amount of wages paid by the employer before any deductions
- The amount of federal income tax withheld each paycheck
- The amount of Social Security taxes withheld each paycheck
- The amount of Medicare taxes withheld each paycheck
- The amount of state income taxes withheld each paycheck, if any
- The amount of city / local income taxes withheld each paycheck, if any
- Involuntary retirement contributions – not voluntary contributions to plans such as a 401(k) or 403(b)
- Heath insurance premiums withheld each paycheck. This does not include contributions to health savings accounts
- Other withholdings from the paycheck that have priority over a garnishment. This can include prior spousal or child support payments
The calculator then provides the user with two sets of eight outputs:
- The total of all paycheck deductions
- Disposable pay, which is found by subtracting the paycheck deductions from the gross paycheck value
- Twenty-five percent of the disposable pay value
- If there is any other withholding with priority, this value is subtracted from the 25% disposable pay value produce the final disposable pay amount
- Based on the pay frequency, a minimum wage credit is applied and used to develop a minimum wage value
- In the case of student loan garnishment, a Section 2(b)(1) value is calculated as 15% of disposable pay
- Finally, the lower of the disposable pay amount, minimum wage value, and Section 2(b)(1) is used to determine the wage or ED garnishment
Wages can be garnished whenever a legal process determines that someone’s wages can be withheld to repay a debt. Typically, this action occurs through a court order. Equitable procedures, such as those established by the Internal Revenue Service (IRS), or a state-level income tax collection agency, can also garnish wages in instances of unpaid taxes or other debts owed the federal government such as unpaid student loans.
The amount of pay that can be garnished is based on a person’s earnings that remain after all legally required deductions are taken from the gross pay amount. This includes taxes such as federal, state, and local income taxes, Social Security, Medicare, and unemployment taxes. If an employer is required by law to withhold monies for retirement, that pay is also exempt from garnishment. Voluntary contributions to retirement accounts are included in disposable pay, meaning these are not deductible and subject to the garnishment calculation.
This calculator can be used to estimate ordinary garnishments, which are those that do NOT support the repayment of debts associated with bankruptcies and payment of state or federal taxes. The calculator compares disposable pay to thirty times the federal minimum wage (a weekly value) and selects the lower value of the two as the wage garnishment value. In cases of student loan garnishment, a third comparison is made to a Section 2(b)(1) value, which is 15% of disposable pay.
Limited Protections Against Discharge
The Consumer Credit Protection Act, or CCPA, prohibits employees from discharging someone whose wages are subject to garnishment for any one debt. However, an employer can discharge an employee, meaning they are not explicitly protected by the CCPA, if their earnings are separately garnished for two or more debts.