How much to withhold for VRC and COD Withholding orders

Orders to withhold

Vehicle Registration Collections (VRC) and Court-Ordered Debt Collections (COD) orders can collect up to 100% of the available assets or the entire balance due, whichever is less, on orders to withhold (OTW) issued prior to January 1, 2022.

Effective January 1, 2022 the minimum basic standard of adequate care amount shall not be subject to collection through bank levies in addition to the current exemptions required by law on orders issued on or after January 1, 2022 

Under Section 704.220(a) of the Code of Civil Procedure, the current automatic minimum basic standard of adequate care exemption amount is $2,080.00. The minimum basic standard of adequate care is revised each fiscal year (07/01-06/30).

The minimum basic standard of adequate care exemption amount for the prior fiscal year (07/01/2022 - 06/30/2023) was $1,947.00.

Continuous order to withhold

Continuous orders to withhold (COTW) can collect for 12 consecutive months or until the balance is paid in full, whichever comes first. The amount collected for each payment will be:

  • 25% for an individual
  • 100% for a business entity

Earnings withholding orders

VRC and COD wage garnishments issued prior to January 1, 2022 can collect up to 25% of disposable earnings until the balance is paid in full.

Effective January 1, 2022, state law limits the maximum amount of earnings that can be withheld from each paycheck on orders issued between January 1, 2022 and August 31, 2023.

Effective September 1, 2023, state law changed the limits of the maximum amount of earnings that can be withheld from each paycheck on orders issued on or after September 1, 2023.

If you received an order for your employee

As an employer, you must send the requested amount on the order to us. We may hold you responsible for the debt if you do not comply.

How to comply with your employee’s order

Give a copy of all pages of the order labeled EMPLOYEE’S COPY to your employee within 10 days of receiving the order.

Provide us with the following:

  • Employer’s acknowledgment
  • First payment within 15 days of the last pay period
  • Employer’s copy of the order with every payment
  • Continue sending payment until the balance is paid in full

Determining the payment amount

Knowing how much to send is part of compliance. Over or under garnishing your employee’s pay can cause complications to their VRC or COD account.

Use our withholding calculator or the instructions below to determine how much to send.

VRC and COD Earnings Withholding Calculator

Use this tool to find out what you may be required to withhold from an employees earnings.

Only use this calculator for orders issued on or after January 1, 2022.

What do I need to determine how much to withhold and send?

Use the following information to determine your employee's applicable minimum wage and disposable earnings prior to calculating how much to withhold.  

The applicable minimum wage for your employee will be either the state minimum wage or a local minimum wage if the city or county where the employee works has its own higher minimum wage.

To learn your employee's disposable earnings:

  1. Add your employee’s wages, salary, commissions, bonuses, vacation pay, or anything else you pay your employee for personal services to find total gross earnings.

    Exception: Do not include tips unless the employee earned them directly from you and not from a customer.

  2. Subtract the statutorily required deductions to calculate your employee’s disposable earnings. These required deductions include, but are not limited to: federal income tax, social security, state income tax, and state disability.

    Do not subtract the following from gross earnings: 401(k) contributions, health deductions, voluntary deductions, voluntary wage assignments or court-ordered garnishments for child support, spousal support, etc.

How do I calculate how much to withhold for my employee?

Depending on the date the order was issued will determine which calculation to use below.

Orders issued between January 1, 2022 and August 31, 2023

After you have figured out the employee’s applicable minimum wage and disposable earning, you can calculate how much to withhold from each paycheck.

The maximum amount to withhold (if any) is the lesser of two amounts:

  • Amount One:  25 percent of the employee’s disposable earnings for the week;

    or

  • Amount Two:  50 percent of the difference between the employee’s disposable earnings for that week and the applicable minimum wage for that week.

Determine Amount One and Two for your employee by following steps 1-7 below or use the VRC and COD Earnings Withholding Calculator.

  1. Calculate the applicable minimum wage for your pay period.
    • If you pay every day or every week, multiply the applicable hourly minimum wage by 40
    • If you pay every two weeks (biweekly), multiply the applicable hourly minimum wage by 80
    • If you pay twice a month (semimonthly), multiply the applicable hourly minimum wage by 86 2⁄3
    • If you pay every month, multiply the applicable hourly minimum wage by 173 1⁄3
  2. Subtract the applicable minimum wage for your pay period (the amount from Step 1) from the employee’s disposable earnings for that pay period.
  3. If the amount from Step 2 is zero or less than zero, do not withhold any money from the employee’s earnings. You are done with the calculation.
  4. If the amount from Step 2 is more than zero, multiply that amount by 50 percent. This is Amount Two, above.
  5. Multiply the employee’s disposable earnings by 25 percent. This is Amount One, above.
  6. Compare the amount from Step 4 (Amount Two) and the amount from Step 5 (Amount One). The lesser amount is the maximum you can withhold. If there is no order of higher priority, this is the amount to withhold.
  7. If the employee’s earnings are subject to another order of higher priority, subtract that amount from the Step 6 maximum withholding amount. If the difference is zero or less than zero, do not withhold any more money from the employee’s earnings. If the difference is more than zero, withhold that amount.

Order issued on or after September 1, 2023

After you have figured out the employee’s applicable minimum wage and disposable earning, you can calculate how much to withhold from each paycheck.

The maximum amount to withhold (if any) is the lesser of two amounts:

  • Amount One:  20 percent of the employee’s disposable earnings for the week;

    or

  • Amount Two:  40 percent of the difference between the employee’s disposable earnings for that week and the applicable minimum wage for that week.

Determine Amount One and Two for your employee by following steps 1-7 below.

  1. Calculate the applicable minimum wage for your pay period.
    • If you pay every day or every week, multiply the applicable hourly minimum wage by 48
    • If you pay every two weeks (biweekly), multiply the applicable hourly minimum wage by 96
    • If you pay twice a month (semimonthly), multiply the applicable hourly minimum wage by 104
    • If you pay every month, multiply the applicable hourly minimum wage by 208
  2. Subtract the applicable minimum wage for your pay period (the amount from Step 1) from the employee’s disposable earnings for that pay period.
  3. If the amount from Step 2 is zero or less than zero, do not withhold any money from the employee’s earnings. You are done with the calculation.
  4. If the amount from Step 2 is more than zero, multiply that amount by 40 percent. This is Amount Two, above.
  5. Multiply the employee’s disposable earnings by 20 percent. This is Amount One, above.
  6. Compare the amount from Step 4 (Amount Two) and the amount from Step 5 (Amount One). The lesser amount is the maximum you can withhold. If there is no order of higher priority, this is the amount to withhold.
  7. If the employee’s earnings are subject to another order of higher priority, subtract that amount from the Step 6 maximum withholding amount. If the difference is zero or less than zero, do not withhold any more money from the employee’s earnings. If the difference is more than zero, withhold that amount.

Adjusting the garnishment amount on your employees pay

Only we can adjust or modify how much you garnish from your employee’s pay. If we adjust or modify the employee’s garnishment, we will send you a new order.

If your employee has multiple orders

Use the following collection hierarchy table to find out how to handle multiple orders.

Collection hierarchy for VRC and COD
Order issued by Order type What to do
State agency Liability other than taxes Pay our order first
Franchise Tax Board, Employment Development Department or CA Department of Tax and Fee Administration Tax liability Do not pay our order. Complete part 2 of our order and return within 15 days
Civil judgment Small claims court Pay our order first
Court If a child or spousal support order is taking less than 25% of your employee’s earnings. Pay their order first then complete the Withholding Calculation for Multiple Orders on page 2B. If less than zero, do not pay our order.
Court If a child or spousal support order is equal 25% of your employee’s earnings. Do not pay our order at this time. Complete part 2 of our order and return within 15 days.
IRS Tax liability for less than 25% of your employee’s earnings. Pay their order first then complete the Withholding Calculation for Multiple Orders on page 2B. If less than zero, do not pay our order.
IRS Tax liability for equal to 25% of your employee’s earnings. Do not pay our order at this time. Complete part 2 of our order and return within 15 days.

Multiple payments

Payments for multiple taxpayers must include a multiple payment submission form to identify the payment amount for each taxpayer.

Sending your employee’s payment

Mail your payments for Vehicle Registration Collections to:

Vehicle Registration Collections
Franchise Tax Board
PO Box 419001
Rancho Cordova CA  95741-9001

Mail your payments for Court-Ordered Debt Collections to:

Court-Ordered Debt Collections
Franchise Tax Board
PO Box 1328
Rancho Cordova CA  95741-1328