How Much Can the IRS Garnish From Your Pay Check?

wage garnishment

The IRS can garnish all of your paycheck over the amount the agency thinks you need to survive, which is called the exempt amount. The exempt amount is based on your filing status (single, head of household, or married) and the number of dependents you claim on your tax return. The rest of this article explains what to expect if you’re being garnished for back taxes and how the agency calculates how much of your check to garnish.

A comprehensive study conducted by the National Bureau of Economic Research showed that about one in 100 American workers were experiencing wage garnishment at some point throughout 2019. If you owe a debt to the IRS, then you could also face wage garnishment in the years ahead.

As you can imagine, having money taken from your paycheck can strain your entire budget. When you receive IRS Notice CP504 or a letter that mentions garnishing your wages, then you need to quickly get informed and determine your options. You’re likely wondering — how much can the IRS garnish from your wages in all? Are there options for reducing the amount you’ll be garnished? This article answers those questions. Keep reading to learn more about IRS wage garnishment orders and the percentage the IRS can garnish below.

What’s Wage Garnishment? When Does the IRS Garnish Wages?

Wage garnishment is a type of collection effort that requires your employer to take out a portion of your paycheck before you receive it. The employer then sends that money to your creditor. Wage garnishment comes about when you fail to address a debt for a long period of time.

So, when will the IRS garnish your wages? When it comes to the IRS, you could face wage garnishment when you have unaddressed unpaid taxes. The IRS won’t simply start garnishing your paycheck out of nowhere, though. As a taxpayer, you have a right to be informed throughout the process, so you’ll receive several notices and ample time to respond and make payment arrangements before the IRS takes this drastic action.

Wage garnishment is non-voluntary, meaning you won’t have the option to decline if an order gets put in place. Your employer also doesn’t have the option of not complying with a garnishment order. That’s why it’s critical to take action before you get to this point.

How the IRS Establishes a Wage Garnishment Order

The IRS has a very specific collection process that they follow to ensure that your rights are upheld and the agents are acting within their legal authority. The agency must send you a notice about the tax debt. Then, the agency must send you a Final Notice of Intent to Levy that also notifies you of your right to appeal. If you don’t respond or appeal within 30 days, the agency can move forward with the garnishment.

Generally, the IRS will become aware of your tax situation when you fail to file or file your tax return but don’t send in the proper payment. In both cases, the IRS will automatically send out a notice regarding your delinquency. At that point, you have the option of taking action to prevent a future garnishment. 

If no response is provided to the IRS, the agency can move forward with a garnishment to involuntarily collect your unpaid taxes. If you have unfiled returns and do not respond to several notices, then the IRS could decide to file a substitute for return on your behalf and estimate your overall tax liability. Then, they’ll start sending you a bill.

If you still don’t respond, then the IRS will progress and start charging penalties and interest on your account. They’ll continue to inform you through notices about what’s happening. If you still don’t act, then the IRS may initiate a wage garnishment against you.

Who Might Face IRS Wage Garnishment?

Any taxpayer who falls significantly behind on their tax obligations and fails to keep in contact with the IRS could face a wage garnishment order. Your tax situation should follow the process above, though, so you won’t face a wage garnishment order unexpectedly. You’ll receive several notices first, including a final notice of intent to levy your wages.

A Basic Overview of the IRS Wage Garnishment Process and Notices

Since the IRS follows very specific procedures, you can expect to receive several notices before your wages are garnished. Here is an overview of some of the notices you might receive in the mail:

  • Notice 3219 and 531: The IRS has a proposed tax assessment against you with an SFR and you have 90 days to respond. 
  • Notice CP14: You owe money on unpaid taxes
  • LT14: You have past due taxes and the IRS hasn’t been able to reach you
  • LT16: You owe a balance and the IRS may take enforcement actions against you
  • LT18: You haven’t responded to previous letters about unfiled returns.
  • CP30: You were charged a penalty for not paying your taxes on time
  • LT39: A reminder about your overdue balance
  • CP71: You owe a tax, penalty, and interest
  • LT75: The IRS has issued a notice of levy to collect unpaid taxes
  • CP77: Notice of an intent to levy assets for unpaid taxes
  • CP501: You have a balance due
  • CP503: You still have a balance due
  • CP504: Notice of an intent to levy

If you ever question the legitimacy of a letter from the IRS, then check for the letter number. This number will either be on the page’s top or bottom right corner. It should match up to the official IRS letter numbering system. The letter should also include the official IRS logo, the correct identifying details that match up to your account, and the direct contact information to get in touch with the IRS.

How the IRS Calculates Your Wage Garnishment

Laws are currently in place that allow taxpayers to exempt some of their income from an IRS tax levy. This exemption amount is calculated based on both your filing status and the number of dependents you are allowed for the year the levy is ordered. The calculation is based on information you provide to your employer.

Before the wage garnishment is put into place, your employer will provide you with a Statement of Dependents and Filing Status form. You must complete this form within three days or your exempt amount will be automatically determined based on the married filing separate filing status with no dependents.

As of 2024, here is a brief overview of what you can expect as an exemption based on those factors under the current guidelines. In other words, this is the amount you will get to take home, and the IRS will garnish the rest.

As a single filer:

  • 0 Dependents: Daily: $56.15 Monthly: $1216.67
  • 1 Dependent: Daily: $75.38 Monthly: $1633.34
  • 2 Dependents: Daily: $94.61 Monthly: $2050.01
  • 3 Dependents: Daily: $113.84 Monthly: $2466.68
  • 4 Dependents: Daily: $133.07 Monthly: $2883.35
  • 5 Dependents: Daily: $152.30 Monthly: $3300.02
  • 5+ Dependents: Daily: $56.15 + 19.23 per dependent Monthly: $1216.67 plus $416.67 per dependent

As Head of Household:

  • 0 Dependents: Daily: $84.23 Monthly: $1825.00
  • 1 Dependent: Daily: $103.46 Monthly: $2241.67
  • 2 Dependents: Daily: $122.69 Monthly: $2658.34
  • 3 Dependents: Daily: $141.92 Monthly: $3075.01
  • 4 Dependents: Daily: $161.15 Monthly: $3491.68
  • 5 Dependents: Daily: $180.38 Monthly: $3908.35
  • 5+ Dependents: Daily: $84.23 plus 19.23 per dependent Monthly: $1825.00 plus $416.67 per dependent

As Married Filing Jointly:

  • 0 Dependents: Daily: $112.31 Monthly: $2433.33
  • 1 Dependent: Daily: $131.54 Monthly: $2850.00
  • 2 Dependents: Daily: $150.77 Monthly: $3266.67
  • 3 Dependents: Daily: $170.00 Monthly: $3683.34
  • 4 Dependents: Daily: $189.23 Monthly: $4100.01
  • 5 Dependents: Daily: $208.46 Monthly: $4516.68
  • 5+ Dependents: Daily: $112.31 plus 19.23 per dependent Monthly: $2433.33 plus $416.67 per dependent

Your exemption amount is based on the time period during which your wages are paid. It is not based on your status for the tax year that you have unpaid taxes. If you receive bonuses on top of your regular earnings, then that amount will not be exempt. 

Dependents refer to the number of children or other dependents claimed on your tax return. You also get to exempt money that is withheld from your paycheck for court-ordered child support, but if you do, you cannot also claim that child as one of your dependents when calculating your exempt amount. 

IRS Garnishment Limits: How Much Does the IRS Garnish?

The IRS will not take any money from your exemption amount, but the rest is subject to complete garnishment. For example, if you have two jobs and one job covers the exempt amount, the IRS can take all of the earnings from your second job. Similarly, if your regular paycheck covers the exempt amount, and your employer issues a bonus, all of the bonus may go to the IRS. In general, the garnishment will continue until you pay off what you owe or make other arrangements with the IRS.

Private Creditor Garnishments Versus the IRS

The Consumer Credit Protection Act’s Title III rules go over specific guidelines to protect consumers from unfair garnishment for debts, but tax debt isn’t included. Most creditors are restricted to taking a certain percentage of your wages, while the IRS can garnish everything except the excluded amount of your income.

Federal law says that most creditors can only garnish the lesser of the following:

  • up to 25% of an employee’s wages
  • the amount by which the disposable income exceeds 30 times the federal minimum wage of $7.25 per hour.

Some states have a lower garnishment percentage that trumps the state law, but Washington State’s garnishment laws mirror federal rules. However, the IRS is not subject to these rules. The IRS can take more than 25% of your wages for unpaid taxes, as long as the agency leaves you with the exempt amount as explained above.

How to Stop Wage Garnishment

If the garnishment order has already been issued, then you’ll need to focus on removing it through negotiation with the IRS or by paying off what you owe in full. We’ll go over a few strategies on how to prevent wage garnishment below.

Pay in Full

If you pay in full, the garnishment will stop immediately. The IRS accepts credit cards for tax payments, but if you take that route, make sure you’re aware of how the interest will affect your payoff time. Some people also borrow from friends and family to get out of tax debt. 

Negotiate with the IRS

One of your best options at this point is to negotiate with an IRS agent about your overdue tax situation. In many cases, you may be able to work out a payment arrangement that also stops your garnishment.

Generally, once the IRS agrees to a payment arrangement, the agency will not pursue any other involuntary collection actions, but it’s generally much easier to set up payments before the garnishment starts. Ideally, when you receive the letter about the garnishment, you should appeal, and during the appeal, you should request a payment plan or suggest an offer in compromise.

Prove Financial Hardship

If you can prove that the wage garnishment is creating immediate financial hardship, the agency may be willing to remove it. Financial hardship means that you cannot pay for necessary living expenses. The IRS has a narrow view of this concept.

File Bankruptcy

Bankruptcy should always be a last resort, and it doesn’t help discharge all tax debts so make sure you understand what’s likely to happen before you file. However, when you file, the courts issue a stay, and while the stay is active, the IRS cannot garnish your wages.

Quit Your Job

Quitting your job will stop the garnishment, but it will also terminate your income flow. Once you find a new job, the IRS will find you and send another garnishment notice to your new employer. 

How to Avoid a Wage Garnishment

It’s always easier to avoid a wage garnishment than to prevent one. Whenever possible, you should reach out to the IRS to set up payment arrangements or secure currently noncollectible status before the agency starts garnishment your wages. 

Always respond to notices promptly and be proactive about paying your taxes. That may mean that you need to increase your withholding or budget for taxes more effectively if you’re self-employed. 

FAQs

What percent can the IRS garnish from your wages? 

The IRS is not restricted to a certain percentage. The IRS can take all of your wages over the exempt amount, regardless of how high the percentage is. However, if the agency is issuing an automatic levy on Social Security payments, it can only take 15% of those payments, but even with a Social Security levy, the percentage can get a lot higher, if the agency does a manual levy rather than an automated one. 

Can the IRS garnish all your wages?

No, the IRS must leave you an exempt amount that is based on your filing status and number of dependents. The exempt amount also includes legally required deductions such as federal and state tax payments and court-ordered child support. 

What should I do if I’m facing wage garnishment?

If you’re facing wage garnishment, then it might be a good idea to contact a tax resolution attorney. You may have specific questions, like how much does the IRS garnish from your paycheck if you have child support obligations or you’re in financial distress? How much will the IRS garnish my wages if I make a big lump sum payment? How much can the IRS levy from my wages if I am self-employed? In these cases, it’s best to get direct answers from a tax professional.

Are You Facing Significant Tax Problems in Washington State?

Getting behind on your tax obligations can feel intimidating, especially when you know you’ve let your situation progress and you’re starting to receive notices about wage garnishment. The good news is that there are always solutions to your tax problems, regardless of how serious they’ve become.

Seattle Legal Services PPLC was established over 13 years ago in 2011 with one goal in mind – to help clients resolve tax issues. Attorney John Georvasilis has helped hundreds of clients manage wage garnishment orders, negotiate with the IRS, and come up with solutions that help resolve their tax issues.

Schedule a consultation with our team now to discuss your specific tax problem with our firm’s founding tax resolution attorney.