If you need to deduct money from an employee's paycheck to account for a wage garnishment, withholding order, or other debt, follow the steps below to set up deductions. You can set up a one-time deduction or an ongoing deduction that will be taken every pay period.
Important Reminders
Custom deductions are always post-tax.
If you need to set up pre-tax deductions, click here for next steps.
All deductions start with the next pay period.
If you have questions about a wage garnishment notice or income withholding order, contact the agency that sent the notice or your accounting professional.
If you've received a court order to enroll dependents in health insurance, head to this article for next steps.
Add a One-Time, Post-Tax Garnishment or Deduction While Running Payroll
👉 Heads up: At this point in time, you are unable to add any one-time, post-tax deductions to CleanCloud Payrolls while running payroll. For all information on setting up one-time, post-tax deductions, see below.
Add a Post-Tax Garnishment or Deduction In An Employee's Profile
Go to Settings → Users → Manage User Accounts.
Click Manage Gusto Employees.
Find your employee and click ⫶ Edit Employee.
Click Deductions.
Click Add Deduction.
Select if this is a garnishment or custom deduction (post-tax).
If you're adding a child support garnishment to a state agency (except South Carolina), Gusto will pay the collecting agency on your behalf. Scroll to "Child Support Garnishments" below for next steps.
For other garnishments, select the type from the dropdown. For custom deductions, enter a description that will appear on the employee’s paystub.
For a child support order from South Carolina, or from a US Territory or tribal support agency, select "Garnishment" and choose the garnishment type "Other Garnishment." Add the description "Child Support."
Gusto will make these deductions from payroll and leave the money in your company account. You will be responsible for paying the agency directly.
Select if this is a recurring or one-time post-tax deduction.
Enter the post-tax deduction amount for each payroll:
Dollar amount per pay period, or
Percentage of disposable income, and optionally a maximum dollar amount per pay period.
For recurring deductions, you can add an annual maximum, if applicable.
Click Submit.
Click Save & Continue, or add additional deductions if needed.
✅ The next time you run payroll, this amount will be deducted post-tax and will appear on the employee's paystub as a separate line item under "Employee Earnings."
📌 You may be responsible for remitting the deduction to the agency—see "What to Do With Deducted Garnishments" below.
What To Do With Deducted Garnishments
Child Support Garnishments
For all states except South Carolina:
Gusto will remit the child support payment to the collecting agency on your behalf.
The garnished amount is deducted from your company bank account.
If you use multiple accounts, the funds come from the one used for that payroll.
For South Carolina:
The garnished amount remains in your company bank account.
You are responsible for remitting payment to the agency.
All Other Garnishments (Except Child Support)
Deductions remain in your company bank account.
You are responsible for remitting payments to the ordering agency.
Remove a Post-Tax Garnishment or Deduction
If a garnishment or deduction is no longer needed, follow these steps:
Go to Settings → Users → Manage User Accounts.
Click Manage Gusto Employees.
Find the employee and click ⫶ Edit Employee.
Click Deductions.
Make your change:
To pause the deduction: Click ⫶ Edit Deduction, reduce "Amount to Withhold" to $0.00, then click Save & Continue.
To remove it permanently: Click Delete this Deduction, then click Save & Continue.
COVID-19 Student Loan Payment Pause Extended
Congress passed a law ending the extension of the payment pause. Interest resumed on Sept. 1, 2023 and payments resumed in October 2023.
If an employee’s wages were garnished in error and you haven't sent the payment to the collector, you can return the funds to the employee.
Child Support Garnishments
Primary and Full Access Admins can set up post-tax deductions for child support.
Set Up a Child Support Garnishment
Go to Settings → Users → Manage User Accounts.
Click Manage Gusto Employees.
Find your employee and click ⫶ Edit Employee.
Click Deductions.
Click Add Deduction.
Select Garnishment as the deduction type.
Select Child Support as the garnishment type.
Select the state agency listed on the order.
Select the county (if applicable).
Florida, New York, and Illinois require this.
Enter the CSE case number.
If unclear, contact the agency directly.
Enter the Total Amount to Withhold found on the order.
Under "Per," select the correct withholding frequency as listed on the order.
Click Save & Continue.
✅ The amount will be deducted post-tax on every payroll going forward until removed.
📌 The deduction will be visible as a separate line item on the paystub.
Legal Requirement:
You may not withhold more than 50% of disposable income if the employee supports another family, or 60% if not.
If the employee is in arrears for over 12 weeks, those limits rise to 55% and 65%.
State limits may vary—check with the agency.
Case ID Formatting
Not all states have provided formatting guidelines. Click here for state-specific instructions.
Garnishment Payments
When You Must Remit Payments
Tribal support agency or U.S. territory garnishments.
When Gusto Sends Payments For You
Orders from any other U.S. state (excluding SC, tribal, or territory).
Applies to regular, transition, and dismissal payrolls.
Agency Payment Timeline
Most states: 2 business days after check date.
Alabama: 5 business days.
Bank Transactions
Garnishment debits will appear as separate line items in your bank account.
Past-Due (Arrears) Payments
Agencies often include arrears in the "Total Amount to Withhold."
If past-due amounts are not included, contact the agency for instructions.
Lump-Sum Payments
Some states allow garnishment on lump-sum payments (bonuses, severance, etc.).
Gusto does not automatically apply deductions to these.
Confirm requirements with the applicable child support agency.
Calculation, Reporting, and Viewing Deductions
How Gusto Calculates Deductions
Based on your employee’s pay schedule and the withholding order.
Where to View Deductions
Admins can view deductions:
While running payroll
In payroll reports
In an employee’s profile
On paystubs
Employees can view deductions on their paystubs.
Reversing Payroll with Garnishments
Garnishment payments are sent 2 business days after payroll check date.
If already sent, Gusto cannot recoup the funds.
Contact the agency directly for next steps.
If you re-run payroll, garnishments will be deducted again unless removed.
Dismissing or Rehiring Employees with Garnishments
Dismissing an Employee
You are legally required to notify the agency within 5 days of the dismissal.
This form may satisfy this in some states.
Rehiring an Employee
Previous garnishments are deactivated.
Re-enter them manually from the original court order.
You may also need to notify the agency.
Duplicate or Multiple Garnishment Orders
Duplicate Orders (Same Child)
Honor the first order.
Give a copy of the second order to the employee.
Contact both agencies to resolve the duplication.
Multiple Orders
Not paid on a first-come, first-served basis.
Gusto applies MPP limits per garnishment.
Example:
Disposable income = $2087.20
Garnishment 1 = $875
Garnishment 2 = $925
Both fall under 50%, so both are deducted: $1800 total
📌 If income isn’t sufficient to cover all orders, use your state’s allocation method.
Most states prioritize current child support, but rules may vary—contact your state agency for clarification.
🛟 Need more help?
Explore our Help Center articles for answers. Contact us for further assistance.