How To Calculate Garnishments

There are two basic steps to determine how much to withhold for child support from an employee's income: calculating disposable income and calculating allowable disposable income. Each is described below.

• Disposable Income = gross pay - mandatory deductions
  • Disposable income is the amount of earnings remaining after subtracting certain mandatory deductions from an employee's gross pay.
  • Mandatory deductions include federal, state and local taxes, unemployment insurance, workers' compensation insurance, state employee retirement deductions, other deductions determined by state law
  • Note that disposable income is not necessarily the same as net pay. An employee may have a deduction taken from his pay that is not mandatory, such as union dues or a car loan payment
  Allowable Disposable Income = disposable income x CCPA % limit
  • Allowable disposable income is the maximum available for child support withholding. In most cases, the amount ordered to be withheld will be less than the allowable disposable income amount, and the ordered amount can be withheld without any problem. Even if the withholding order specifies a higher payment, the allowable disposable income is the most that may be withheld
  • The Federal Consumer Credit Protection Act (CCPA) sets limits on withholding an employee-parent's disposable income based on his/her current family situation and child support payment history. The CCPA protects the employee from having an excessive amount withheld. (Some states have enacted laws that provide even more protection to the employee-parent's income, although most states follow the federal limits
  • The withholding limits set by the federal CCPA are as follows:
    • 50% - Supports a second family, with no arrearage or less than 12 weeks in arrears
    • 55% - Supports a second family, and more than 12 weeks in arrears
    • 60% - Single, with no arrearage or less than 12 weeks in arrears
    • 65% - Single, and is more than 12 weeks in arrears
  (A second family means there is a spouse and/or child for whom the employee has responsibility. “In arrears“ means there is past due, unpaid support owed by the noncustodial parent.)  Note that the law of the state where the employee works (the “principal place of employment“ state) determines which deductions are mandatory. In some states, the example below would change because health insurance and union dues, for example, are mandatory deductions.