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Disposable Income Formula:
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Disposable income for garnishment purposes refers to the amount of money remaining after subtracting legally required deductions (taxes and other mandatory deductions) from gross income. This amount is used to determine how much can be legally garnished from an individual's wages.
The calculator uses the disposable income formula:
Where:
Explanation: The calculation determines the actual amount available for garnishment after all legally required deductions have been made from gross income.
Details: Accurate disposable income calculation is crucial for determining the maximum allowable garnishment amount while ensuring compliance with federal and state wage garnishment laws that protect a portion of earnings from creditors.
Tips: Enter gross income in dollars, taxes in dollars, and deductions in dollars. All values must be valid positive numbers. The calculator will compute the disposable income available for garnishment purposes.
Q1: What constitutes mandatory deductions?
A: Mandatory deductions include federal, state, and local taxes, Social Security, Medicare, and other legally required withholdings.
Q2: How much can be garnished from disposable income?
A: Federal law typically limits garnishment to the lesser of 25% of disposable income or the amount by which disposable income exceeds 30 times the federal minimum wage.
Q3: Are there different garnishment limits?
A: Yes, some states have lower garnishment limits than federal law, and certain types of debt (child support, tax debts) may have different limits.
Q4: What income is exempt from garnishment?
A: Certain types of income such as Social Security, disability benefits, and retirement benefits may be fully or partially exempt from garnishment.
Q5: How often should disposable income be calculated?
A: Disposable income should be calculated each pay period as income and deductions may vary over time.