The Consumer Credit Protection Act is the federal backstop that keeps wage garnishment from wrecking an employee's paycheck. Before the CCPA passed in 1968, employers could (and did) fire workers after a single wage garnishment, and there were no federal limits on how much of a paycheck a creditor could take. The CCPA changed both. The law also introduced the Truth in Lending Act and the Fair Credit Reporting Act as subcomponents, which is why the statute covers far more than just garnishment. For payroll teams, the CCPA sets the math for how much can legally come out of a worker's check each pay period.
How the CCPA Caps Wage Garnishment Title III of the CCPA limits garnishment for most consumer debts to the lesser of two numbers: 25% of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum wage ($7.25 in 2026, making the floor $217.50 weekly). Whichever number is smaller is the maximum that can be withheld. The cap applies per pay period, not cumulatively, so a large debt doesn't let creditors take more than the cap on any single check.
State laws can be more protective of employees but cannot exceed the federal ceiling. Several states (Texas, Pennsylvania, North Carolina, South Carolina) bar most consumer-debt garnishment entirely.
Garnishment Rules for Child Support, Student Loans, and Taxes Different types of debt have different CCPA caps. Child support and alimony can take up to 50% of disposable earnings (60% if the employee doesn't support another spouse or child), plus an extra 5% for support arrears more than 12 weeks old. Federal student loan garnishment is capped at 15% of disposable earnings. Federal tax levies don't follow the CCPA formula; the IRS uses its own exempt amount based on filing status and dependents.
What Counts as Disposable Earnings? Disposable earnings are gross wages minus legally required deductions: federal, state, and local income taxes, Social Security and Medicare (FICA ), and state unemployment insurance. Voluntary deductions (retirement contributions, health insurance premiums, union dues) don't reduce disposable earnings for garnishment purposes. Getting this wrong is the most common payroll error in garnishment compliance.
Termination Protections Under the CCPA Section 304 of the CCPA prohibits employers from firing an employee because their wages have been garnished for a single debt. The protection covers only the first debt: if a second garnishment order arrives for a different debt, the CCPA's termination protection no longer applies, though many state laws extend further. Violations carry up to one year in prison plus a $1,000 fine. The Wage and Hour Division enforces this provision.
Building Payroll Processes That Stay Compliant With the CCPA Four practices. First, train payroll staff on the math. The 25% vs. 30-times-minimum-wage calculation trips up new processors constantly. Second, track garnishment orders in the HRIS with expiration dates since many orders have a defined term. Third, process competing orders by priority (child support first, then federal tax, then other debts) rather than first-come-first-served. Fourth, document terminations carefully to avoid a wrongful-termination claim under Section 304.
The Department of Labor's Wage and Hour Division publishes an employer fact sheet on CCPA Title III wage garnishment at dol.gov/agencies/whd/fact-sheets/30-cpca . Consumer-facing CCPA guidance is at the Federal Trade Commission's site at ftc.gov/legal-library/browse/statutes/consumer-credit-protection-act , and IRS tax-levy rules are at irs.gov/businesses/wage-levies .
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