The Fort Collins Area Chamber of Commerce occasionally shares insights and resources submitted by Chamber members and community partners. The following guest article was provided by Journey Payroll & HR.

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Colorado Wage Garnishments Beyond Child Support: What Every Employer Must Know

A Colorado Employer’s Guide to Creditor Garnishments, Tax Levies, and Student Loan Withholding

Published: September 2026 | Last Reviewed: September 2026 | Reflects Colorado wage garnishment requirements current as of 2025-2026

Most Colorado employers are familiar with child support withholding. It arrives with a formal income withholding order, the rules are well-documented, and payroll systems are generally set up to handle it. What could catch employers off guard is everything else.

The challenge is that not all garnishments work the same way. A creditor garnishment follows different rules than an IRS levy, which follows different rules than a student loan withholding. Knowing which type of order arrived, and what it requires, is the starting point for handling it correctly.

This covers what Colorado employers are required to do when non-child-support garnishments arrive, how the withholding limits and priority rules work, and what the consequences are for noncompliance.

This guidance applies to Colorado employers of any size who receive garnishment orders for current employees. Journey Payroll & HR partners with Colorado chambers of commerce to bring timely payroll compliance guidance directly to the small business community. This article reflects current Colorado and federal garnishment requirements and is intended to help employers act correctly before the next pay period.

What Is a Wage Garnishment?

A wage garnishment is a legal order requiring an employer to withhold a portion of an employee’s earnings and remit that amount to a creditor, government agency, or court. Most creditor garnishments require a court judgment before a creditor can compel an employer to withhold wages.

Colorado employers may receive several types of garnishment orders. The most common are creditor garnishments for consumer debts, medical bills, or personal loans. Beyond those, employers may also receive IRS federal tax levies, Colorado Department of Revenue state tax levies, federal student loan garnishments, and bankruptcy court orders. Child support income withholding orders are covered separately in a prior Journey article.

Each type follows its own withholding rules, duration limits, and remittance requirements. Understanding the distinctions across garnishment types is essential to processing them correctly.

Colorado’s Creditor Garnishment Limits

When a creditor obtains a court judgment and serves a writ of continuing garnishment, Colorado law determines how much can be withheld from each paycheck. Colorado uses a two-part test and applies whichever result is lower.

The first calculation is 20% of the employee’s disposable earnings for that pay period. The second is the amount by which the employee’s weekly disposable earnings exceed 40 times the Colorado minimum wage. Whichever figure is lower is the maximum that can be withheld.

Disposable earnings are wages remaining after legally required deductions, including federal, state, and local income taxes, Social Security, Medicare, and state unemployment insurance. Voluntary deductions such as health insurance premiums and retirement contributions are not subtracted when calculating this figure.

The 40-times minimum wage floor matters in practice. Based on Colorado’s 2026 minimum wage of $15.16 per hour, the protected floor is $606.40 per week ($15.16 x 40). If an employee’s disposable earnings fall below that amount, nothing can be garnished regardless of what the court order says.

It is also worth noting that Colorado’s 20% cap is more protective than the federal Consumer Credit Protection Act ceiling of 25%. Colorado’s lower limit governs for creditor garnishments in this state.

For Colorado garnishment limits and employer guidance, visit the Colorado Judicial Branch: https://www.courts.state.co.us

How Long a Creditor Garnishment Lasts

Under C.R.S. 13-54.5-102, a writ of continuing garnishment is a lien and continuing levy against an employee’s earnings for 182 days from the date the writ is served on the employer, approximately six months.

If the debt is not satisfied within 182 days, the creditor may serve a new writ. Tracking the effective dates of each writ carefully and stopping withholding at the correct time is important. Continuing to withhold after a writ expires creates liability for the employer.

A writ terminates earlier than 182 days if the debt is paid in full, the underlying judgment is vacated or modified, the employee separates from employment, or a bankruptcy filing.

The Priority Order for Multiple Garnishments

When an employee has more than one garnishment order, Colorado law requires employers to follow a strict priority order. The type of debt, not the date the order was received, determines which garnishment takes precedence.

Child support generally comes first, though if a federal or state tax levy is received before a child support order, that levy must be paid first. After child support, delinquent federal income taxes take priority through an IRS levy. Bankruptcy court orders and reorganization plans follow in third. State tax levies from the Colorado Department of Revenue are fourth. Delinquent federal student loans are fifth, and creditor garnishments are last.

A Colorado-specific rule worth noting is that only one creditor garnishment can be paid at a time. If a second creditor garnishment arrives while the first is still active, the second must wait until the first is satisfied or expires. Notifying the second creditor that a prior garnishment is in effect is appropriate when this situation arises. For more information on wage garnishment priority order visit: https://osc.colorado.gov/contact/faqs.

If an IRS levy arrives while a creditor garnishment is active, the IRS levy takes priority and effectively suspends the creditor garnishment. Child support remains active alongside an IRS levy and is never displaced.

IRS Federal Tax Levies

IRS tax levies operate under different rules than creditor garnishments and can have a more significant impact on an employee’s take-home pay.

Unlike creditor garnishments, the IRS does not need a court judgment to levy wages. The process begins with the IRS sending a Notice of Intent to Levy and a Notice of Your Right to a Hearing. Once the levy is served on the employer, withholding must begin immediately.

The amount withheld is calculated using IRS Publication 1494, which is based on the employee’s filing status and the number of dependents claimed on an exemption form. The employee must complete and return that exemption form within a specified timeframe. If they do not, the IRS instructs the employer to use the lowest exemption amount, which results in the highest possible withholding.

IRS levies remain in effect until the IRS releases the levy in writing. That typically happens when the tax debt is satisfied or a payment arrangement is established. An IRS levy cannot be stopped without written release from the IRS.

For IRS wage levy information and Publication 1494, visit: https://www.irs.gov/businesses/small-businesses-self-employed/garnishment.

Colorado Department of Revenue Tax Levies

The Colorado Department of Revenue can levy wages for unpaid state income taxes using a process similar to IRS levies, though administered at the state level through the Department of Revenue rather than the IRS.

State tax levies take priority over creditor garnishments and student loan garnishments but are subordinate to child support and IRS levies.

Federal Student Loan Garnishments

When a borrower defaults on a federal student loan, the U.S. Department of Education can garnish wages without a court order through a process called administrative wage garnishment.

The limit for student loan garnishments is 15% of the employee’s disposable earnings per pay period. However, the employee must retain weekly disposable earnings of at least 30 times the federal minimum wage. Based on the current federal minimum wage of $7.25 per hour, that protected floor is $217.50 per week ($7.25 x 30).

Before withholding begins, the Department of Education or its loan servicer must send the employer a garnishment notice. Employers must begin withholding within the timeframe specified in that notice. The garnishment continues until the loan is paid in full or the borrower makes other arrangements with the loan servicer.

For federal student loan garnishment guidance, visit the U.S. Department of Education: https://studentaid.gov/manage-loans/default/collections

Employer Remittance Requirements

Regardless of garnishment type, withheld amounts must be remitted to the designated recipient within the timeframe specified in the order. Remittance deadlines vary depending on which court issued the writ.

For writs issued by the U.S. District Court for the District of Colorado, remittance is required no less than five days and no more than ten days after each pay date. For writs issued by Colorado state courts, employers should follow the specific remittance instructions contained in the order, as state court writs carry their own timelines that may differ from the federal district court standard.

When in doubt, reviewing the order carefully and following its specific instructions is always the correct approach. If the order does not specify a remittance timeline, contacting the issuing court or a qualified legal professional for clarification before the next pay date is advisable.

Along with remittance, employers must provide the employee with a calculation of exempt earnings at the time of each affected pay period, explaining how the withholding amount was determined.

If an employee separates from employment while a garnishment is in effect, the employer must notify the creditor within 10 days of the separation.

What Employers Cannot Do

Colorado and federal law prohibit adverse employment action based on wage garnishments. Under C.R.S. 13-54.5-110 and federal law, employers cannot terminate, discipline, or otherwise retaliate against an employee because of a wage garnishment.

Colorado’s protection goes further than federal law. While federal law only protects employees from termination when one debt is being garnished, Colorado prohibits adverse action regardless of how many garnishments an employee has.

If an employer wrongfully terminates an employee due to a wage garnishment, the employee may file a lawsuit within 91 days of the termination under C.R.S. 13-54.5-105. A successful claim entitles the employee to recover up to six weeks of lost wages plus attorney fees and reinstatement.

What Happens If an Employer Does Not Comply

Failing to comply with a wage garnishment order exposes the employer to direct financial liability. Under C.R.S. 13-54.5, an employer who receives a valid writ of garnishment and fails to withhold or remit correctly can be held liable for the full debt amount that should have been collected.

Courts take garnishment noncompliance seriously.

Journey Payroll & HR helps Colorado employers across local communities ensure payroll systems are configured correctly when garnishment orders arrive, so withholding and remittance are handled accurately and on time.

How to Set Up Non-Child-Support Garnishments in Payroll

When a garnishment order arrives, working through the following steps before the next pay period helps ensure compliance.

• Identify the type of garnishment received; creditor, IRS levy, state levy, student loan, or bankruptcy; since each follows different rules
• Confirm whether a higher-priority garnishment is already active for the same employee
• Calculate disposable earnings correctly, excluding only legally required deductions
• Apply the correct withholding limit for the garnishment type: 20% for creditors, 15% for student loans, Publication 1494 for IRS levies
• Confirm the withholding does not fall below the applicable protected earnings floor ($606.40 per week for creditor garnishments based on Colorado’s 2026 minimum wage; $217.50 per week for student loan garnishments based on the federal minimum wage)
• Set up the withholding in your payroll system beginning with the correct pay period
• Provide the employee with a copy of the garnishment order and the calculation of exempt earnings
• Configure remittance within the required timeframe following each pay date
• Track the writ expiration date for writs of continuing garnishment (182 days) and stop withholding at the correct time; levies are the exception
• Retain all garnishment orders, calculations, and remittance records in the employee’s payroll file

If a second garnishment arrives while the first is active, notifying the second creditor in writing that a prior order is in effect and retaining a copy of that communication is a sound practice.

The Bottom Line

Non-child-support garnishments each come with their own rules, their own limits, and their own timelines. Colorado’s creditor garnishment cap is lower than the federal ceiling, the priority order is strict, and only one creditor garnishment can run at a time. Employers who understand these distinctions are well positioned to handle garnishment orders correctly from the first pay period affected.

Acting correctly from the start is far less costly than addressing a compliance issue after a creditor or court becomes involved.

Frequently Asked Questions

What is the maximum amount that can be garnished from a Colorado employee’s paycheck? It depends on the garnishment type. For creditor garnishments, Colorado caps withholding at 20% of disposable earnings or the amount exceeding 40 times the state minimum wage ($606.40 per week in 2026), whichever is less. For federal student loans, the cap is 15% of disposable earnings, with the employee retaining at least $217.50 per week. IRS levies use a separate calculation based on the employee’s filing status and dependents under IRS Publication 1494.

Can a Colorado employer receive more than one garnishment for the same employee at the same time? Yes, but only one creditor garnishment can be actively paid at a time. Higher-priority garnishments such as child support, IRS levies, and student loans run alongside creditor garnishments according to the priority order. If two creditor garnishments arrive, the second must wait until the first is satisfied or expires.

How long does a creditor garnishment last in Colorado? A writ of continuing garnishment lasts 182 days under C.R.S. 13-54.5-102. If the debt is not satisfied within that time, the creditor may serve a new writ.

Does an employer have to notify the employee when a garnishment is received? Yes. Colorado law requires employers to provide the employee with a copy of the garnishment order and a calculation of exempt earnings at the time of the first affected pay period, and a calculation of exempt earnings at every subsequent affected pay period.

Can a Colorado employer terminate an employee who has multiple wage garnishments? No. Under C.R.S. 13-54.5-110, Colorado prohibits adverse employment action based on wage garnishments regardless of how many orders the employee has. This is broader than federal law, which only protects employees from termination when one debt is being garnished.

What happens if an employer does not comply with a wage garnishment order? The employer can be held personally liable for the full amount that should have been withheld under C.R.S. 13-54.5. Courts may also hold noncompliant employers in contempt, resulting in additional penalties.

How does an IRS tax levy differ from a creditor garnishment? Unlike creditor garnishments, the IRS does not need a court judgment to levy wages. The withholding amount is calculated using IRS Publication 1494 based on the employee’s filing status and dependents. IRS levies remain in effect until the IRS releases them in writing. While child support generally comes first in the priority order, an IRS levy takes second priority and will suspend an active creditor garnishment when received.

What should an employer do when an employee with an active garnishment leaves the company? The employer must notify the creditor within 10 days of the employee’s separation from employment.

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About the Source

This article was prepared by Journey Payroll & HR, a payroll and human resources company headquartered in Fort Collins, Colorado, with clients in Denver, Colorado Springs, Boulder, Pueblo, and communities across the state. Journey has maintained a 98% client retention rate since its founding in 2010 and is dedicated to helping Colorado employers navigate the complexities of Colorado employment and payroll requirements. This article is provided for educational purposes and reflects Colorado wage garnishment requirements under C.R.S. 13-54.5 and related statutes, current as of 2025-2026. For binding decisions on specific situations, consult a qualified legal or HR professional.

Journey Payroll & HR publishes ongoing compliance guidance for Colorado employers on topics including payroll tax, wage garnishment, FAMLI, Colorado wage law, benefits administration, and HR policy. Visit JourneyPayrollHR.com to learn more.