Disposable Pay Law and Legal Definition

According to 7 CFR 3.71 (Title 7-Agriculture; Subtitle A - Office Of The Secretary Of Agriculture; Part 3 - Debt Management; Subpart G - Federal Salary Offset), disposable pay means “that part of current basic pay, special pay, incentive pay, retired pay, retainer pay, or in the case of an employee not entitled to basic pay, other authorized pay remaining after the deduction of any amount required by law to be withheld (other than deductions to execute garnishment orders in accordance with 5 CFR parts 581 and 582). Among the legally required deductions that must be applied first to determine disposable pay are levies pursuant to the Internal Revenue Code (title 26, United States Code) and deductions described in section 581.105(b) through (f) of part 5 of this title.”

According to 34 CFR 31.2 [Title 34 – Education; Subtitle A -- Office of the Secretary, Department of Education; Part 31 -- Salary Offset for Federal Employees who are Indebted to the United States Under Programs Administered by the Secretary of Education], the term disposable pay means “the amount that remains from an employee's pay after required deductions for Federal, State, and local income taxes; Social Security taxes, including Medicare taxes; Federal retirement programs; premiums for basic life insurance and health insurance benefits; and such other deductions that are required by law to be withheld.”

According to 34 CFR 34.3 [Title 34 – Education; Subtitle A -- Office of the Secretary, Department of Education; Part 34 -- Administrative Wage Garnishment], the term disposable pay --

“(a) (1) Means that part of a debtor's compensation for personal services, whether or not denominated as wages, from an employer that remains after the deduction of health insurance premiums and any amounts required by law to be withheld.

(2) For purposes of this part, "amounts required by law to be withheld" include amounts for deductions such as social security taxes and withholding taxes, but do not include any amount withheld under a court order; and

(b) Includes, but is not limited to, salary, bonuses, commissions, or vacation pay.”