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State Tax Garnishment Rules

Just about everyone knows that it’s not a good idea to rack up a lot of financial burdens. What might not be as well known are some of the potential consequences. 

Depending on the nature of the liability and who you owe, you could end up seeing your wages garnished. There are federal laws designed to establish clear rules for garnishing wages. However, each state has its own set of laws for wage garnishment, and they can vary significantly from one another. 

If you want to stop your wages from being garnished, you should talk with a tax professional. They can shine some light on the specific laws in your state and offer solutions to help you settle your outstanding back taxes. 

What Is Wage Garnishment?

Wage garnishment is a legal process for collecting money that can be utilized by certain creditors that are owed taxes. Once enacted, your employer will be required to withhold a certain percentage of your paycheck each pay period. 

The amount will be sent directly to the creditor and is applied to the overall amount owed. The garnishment will continue until the amount is settled or you’ve reached a separate agreement with your creditor. 

Who Can Use Wage Garnishment?

Depending on the type of liability, the creditor might have to seek out a court order before wage garnishment can begin. Credit card companies, medical professionals, or retail-based creditors would first have to sue you and obtain a monetary judgment by the court. The judge would make their ruling and determine if wage garnishment was an acceptable collection option. 

Court orders won’t be necessary for other types of bills. If you fall behind on student loans, child support, alimony, or back taxes, then you could have your wages garnished without a court order. The only thing these agencies would need to do is provide you with a notice of impending garnishment and an opportunity for you to object. 

What Are the Federal Guidelines On Wage Garnishment?

The exact details for wage garnishment can vary depending on the state, but they all must follow federal guidelines. Wage garnishment can result in a lot of money being taken out of your check each period, so you should try to avoid wage garnishment at all costs. 

It would be wise to consult with a tax attorney and learn more about your options. They can recommend alternative methods of paying your liabilities that don’t involve having parts of your paycheck withheld. 

Depending on the type of bills that you have, there are substantially different limits:

Judgment Creditors

Tax bills permitted by court order are a bit complicated and require some math. These bills can only seize the lesser of 25% of your disposable income or the amount that exceeds 30 times the federal minimum wage. 

For example, let’s say that you make $500 a week after taxes, insurance, and other deductions are taken out. If 25% of 500 is 125, then one of your options would be $125. The federal minimum wage is currently $7.25, and 30 times that amount is $217.50. If you make $500 a week, then you make $282.50, more than 30 times the minimum wage. So, in this case, you could only have up to $125 garnished each week. 

If you were making $250 a week, it would be the opposite scenario. Since 25% of 250 is 62.5, then one option is $62.50 a week. However, subtracting $217.50 from $250 would only be $32.50. Since this number is lower, you would only have $32.50 garnished each week. 

Student Loans

The United States Department of Education can garnish a maximum of 15% of your disposable income each pay period. They do not require a court order, but you will have to be notified and given an opportunity to object. Filing for bankruptcy can stop wage garnishment for student loans. However, the loan amount is not erased by bankruptcy, and garnishment can continue to occur in the future.   

Child Support and Alimony

Unless specifically agreed to be handled out of court, child support and alimony payments are directly withheld from paychecks. Up to 50% of your disposable income can be garnished for child support or alimony as long as you are currently supporting a spouse or child not listed on order. The limit increases to 60% if you are not also supporting a spouse or child. Being more than 12 weeks behind can result in an additional 5% penalty being added on. 

Back Taxes

The rules for unpaid back taxes are a little murkier. The IRS will determine how much to garnish based on your number of dependents and your standard deduction amount on your returns. The IRS does not need to obtain a court order to begin garnishment but is required to notify you before it starts. 

What Are the State Laws On Wage Garnishment?

Each state has its own specific laws regarding wage garnishment and your rights. They can also vary in their overall statute of limitations. It’s best to consult with a local tax attorney to get a complete listing of your state’s specific garnishment laws. 

Here is a brief summary of each state’s wage garnishment rules:

  • Alabama: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply.  
  • Alaska: State or local pensions, public benefits, insurance benefits, and alimony can all be exempt from garnishment. The limit of wage garnishment is 25% of disposable income. Employers cannot fire, suspend, or discriminate against an employee due to withheld wages.
  • Arizona: New hires or returning employees are required to disclose an active child support withholding order. All federal garnishment limits apply.
  • Arkansas: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply.  
  • California: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply with the exception of a higher state minimum wage and larger multiplier.  
  • Colorado: Employers cannot fire an employee for having a wage garnishment. All federal garnishment limits apply.
  • Connecticut: Employers cannot fire employees due to wage garnishments unless more than seven withholdings have occurred within a calendar year. The limit of wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage or the Connecticut minimum wage of $9.15 an hour.
  • Delaware: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. There can only be one active wage garnishment placed on an employee at a time. The next garnishment will begin after the first one has been paid off or otherwise settled. All federal garnishment limits apply.
  • Florida: Employees are exempt from wage garnishment if their disposable income is less than 30 times the federal minimum wage. An employee is also exempt if they claim head of the family on their tax information and make less than $750 a week. In order to receive this claim, the employee must provide more than 50% of financial support for a child or dependent living with them. 
  • Georgia: Employers cannot fire employees due to wage garnishment. All federal garnishment limits apply.  
  • Hawaii: Employers cannot fire employees due to wage garnishment. Garnishment limits are established by monthly disposable income and increase based on the total: 5% for the first $100, 10% for the next $100, and 25% on all income over $200. 
  • Idaho: Employers cannot fire employees due to wage garnishment. All federal garnishment limits apply.  
  • Illinois: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The wage garnishment limit is the lower option between 15% of gross wages or the amount of pay exceeding 45 times the Illinois minimum wage of $9.25 an hour. 
  • Indiana: Employers cannot fire employees due to wage garnishment. All federal garnishment limits apply unless an employee can show good cause that the maximum should be reduced.
  • Iowa: Employers cannot fire employees due to wage garnishment. There is a cap on the total amount that can be taken by garnishment in a single year. The total is determined based on income tax bracket: no more than $250 for a salary of $12,000 or less a year, no more than $400 for a salary of $12,000 to $15,999 a year, and no more than $800 for a salary of $16,000 to $23,999 a year, no more than $1,500 for a salary of $24,000 to $34,999 a year, no more than $2,000 for a salary of $35,000 to $49,999 a year, no more than 10% of wages for a salary of $50,000 or more a year. 
  • Kansas: Employers cannot fire employees due to wage garnishment. All federal garnishment limits apply.  
  • Kentucky: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply.  
  • Louisiana: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply.  
  • Maine: Employers cannot fire employees for having a wage garnishment; however, it doesn’t state the maximum limit of withholdings. The limit of wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 40 times the Maine minimum wage of $11.00 an hour.
  • Maryland: Employers cannot fire an employee for having a single wage garnishment within a calendar year. All federal garnishment limits apply in Carolina, Kent, Worcesters, and Queen Anne’s counties. For other counties, the limit of wage garnishment is the lower option, between 25% of weekly disposable income or the amount of weekly pay that exceeds $145.  
  • Massachusetts: The limit of wage garnishment is the lower option between 15% of gross wages or the amount of pay that exceeds 50 times the federal minimum wage or the Massachusetts minimum wage of $12.00 an hour. 
  • Michigan: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply.  
  • Minnesota: Employers cannot fire employees for having a wage garnishment applied by a consumer creditor. All federal garnishment limits apply. 
  • Mississippi: Wage garnishment cannot start until 30 days after the court order is served. Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply.  
  • Missouri: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply, but the limit is reduced if an employee claims the head of household.
  • Montana: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. Employees are exempt from wage garnishment if their disposable income is less than 30 times the federal minimum wage. If weekly pay is more than $290.00 a week, then no more than 25% can be garnished.
  • Nebraska: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to employees with multiple withholdings. All federal garnishment limits apply.  
  • Nevada: Employers cannot fire employees for having a wage garnishment. The limit of wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 50 times the federal minimum wage.
  • New Hampshire: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit of wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 50 times the federal minimum wage.
  • New Jersey: Employers cannot fire employees for having a wage garnishment. The limit of wage garnishment is 10% of their disposable income if they earn less than 250% of the federal poverty level or 25% of their disposable income if they earn more than 250% of the federal poverty level.
  • New Mexico: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit of wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage.
  • New York: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 10% of gross wages or 25% of disposable income that exceeds 30 times the federal minimum wage. An employee is exempt from wage garnishment if they make less than 30 times the minimum wage.
  • North Carolina: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply.  
  • North Dakota: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage. 
  • Ohio: Employers cannot fire employees for having a single wage garnishment within a calendar year or if the garnishment is related to child support. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage.  
  • Oklahoma: Employers cannot fire employees for having a wage garnishment unless there are more than two garnishments in one calendar year. All federal garnishment limits apply.  
  • Oregon: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply. 
  • Pennsylvania: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment varies based on the type of liabilities: 10% for back rent, 60% for child support and alimony, 15% for student loans, and 10% for back taxes. 
  • Rhode Island: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage. 
  • South Carolina: Private parties are prohibited from garnishing consumer bills. Wage garnishment for all other types of liability is permitted. Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. All federal garnishment limits apply. 
  • South Dakota: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 20% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage.   
  • Tennessee: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower options between 25% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage.
  • Texas: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply. 
  • Utah: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage. 
  • Vermont: Employers cannot fire employees for having a wage garnishment. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage. For consumer bills, the maximum is either 15% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage. 
  • Virginia: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with multiple withholdings. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 40 times the federal minimum wage.
  • Washington: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with three or more garnishment within a calendar year. The limit for wage garnishment is the lower option between 25% of disposable income or the amount of pay that exceeds 25 times the federal minimum wage.
  • West Virginia: Employers cannot fire employees for having a wage garnishment. The limit for wage garnishment is the lower option between 20% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage. 
  • Wisconsin: Employers cannot fire employees for having a wage garnishment, but this protection no longer applies to an employee with three or more garnishment within a calendar year. The limit for wage garnishment is the lower option between 20% of disposable income or the amount of pay that exceeds 30 times the federal minimum wage. Anyone that has received welfare benefits within the last six months or has a household income below the federal poverty line is exempt from wage garnishment. If an employee has at least 25% of their wages being garnished for child support, they are exempt from further withholdings. 
  • Wyoming: Employers cannot fire employees for having a wage garnishment. All federal garnishment limits apply.

The Takeaway

The state guidelines for wage garnishment can vary significantly. If you are at risk of a wage garnishment, you should consult with a local tax attorney now. Tax experts like the ones at Coast One Tax Group can help you figure out the best way to settle your liability bills and end wage garnishment.  

SOURCES

Information About Wage Levies | Internal Revenue Service

Can student loans be cleared through bankruptcy? | The Conversation

Wage Garnishment Calculator | Good Calculators

What Is Wage Garnishment? | US News

Wage Garnishment: How It Works and What You Can Do | NerdWallet