Indiana Wage Garnishment Calculation

The judge signed a wage garnishment order, but how much will the employer actually withhold? Indiana follows a dual-test formula that protects low-income debtors while giving creditors a meaningful cut from higher earners.

Here is the math.

The Two-Test Formula

Under IC 37-2-6-4(e) and the federal Consumer Credit Protection Act (15 U.S.C. § 1671), the maximum garnishable amount per pay period is the lesser of:

1. 25% of disposable earnings, or
2. The amount by which disposable earnings exceed 30 times the federal minimum wage ($7.25 × 30 = $217.50 per week)

The employer applies both tests and withholds the smaller number.

What Counts as Disposable Earnings

Disposable earnings are gross pay minus mandatory deductions required by law:

• Federal income tax
• State income tax
• Local income tax (Indiana counties levy local income tax)
• Social Security (FICA)
• Medicare

Voluntary deductions do not reduce the calculation. Retirement contributions, health insurance premiums, union dues, charitable donations — these all stay in gross pay for garnishment purposes. The debtor cannot reduce garnishable earnings by increasing 401(k) contributions.

Worked Example: Weekly Pay

The debtor earns $600 gross per week with $100 in mandatory tax withholdings.

Step 1: Calculate disposable earnings. $600 − $100 = $500 disposable earnings

Step 2: Apply Test A (25% cap). $500 × 0.25 = $125

Step 3: Apply Test B (minimum wage floor). $500 − $217.50 = $282.50

Step 4: Take the lesser. $125 < $282.50, so the employer withholds $125 per week.

Pay Period Adjustments

The $217.50 weekly floor scales proportionally for other pay frequencies:

If the debtor earns at or below the floor, nothing can be garnished — the entire paycheck is protected. Between the floor and the 25% threshold, only the excess above the floor is garnished. Above the threshold, the cap is a flat 25%.

Low-Income Example

The debtor earns $250 per week in disposable earnings.

• Test A: $250 × 0.25 = $62.50
• Test B: $250 − $217.50 = $32.50
• Lesser: $32.50 per week

At very low income levels, Test B almost always produces the smaller number. A debtor earning exactly $217.50 in disposable weekly income has $0 garnishable.

Self-Employed Debtors

Wage garnishment works through employers. If the debtor is self-employed, there is no employer to serve with a garnishment order. Self-employment income is not subject to the standard wage garnishment framework.

For self-employed debtors, bank garnishment is the more effective tool. Money deposited into business or personal accounts can be reached through the Adverse Claims Act (IC 28-9), subject to the $450 intangible property exemption and any applicable federal benefit protections.

Alternatively, if the self-employed debtor has regular clients who owe them money, those receivables may be attachable through a proceedings supplemental — the court can order the client (as a garnishee) to pay the creditor instead of the debtor.

Multiple Garnishment Orders

If more than one creditor has a garnishment order against the same debtor, Indiana applies strict priority based on the date and time of service. The first-served garnishment must be fully satisfied before the second one begins receiving payments.

The total withholding from all creditors combined cannot exceed the 25% or Test B limit — the debtor always retains the protected amount. If a child support order is already in effect, it takes priority over your judgment garnishment, and the combined withholding may leave nothing for your claim until the support obligation is satisfied.

For the complete wage garnishment procedure — including how to file the motion, serve the employer, and track payments — the Collecting a Small Claims Judgment in Indiana guide walks through every step.

See more Indiana guides →