When an employee’s gross pay is insufficient to permit all deductions, the order in which authorized deductions are to be processed is as follows:
Retirement | Deductions for a defined benefit plan including Civil Service Retirement System/federal Employees Retirement System, Basic Benefit, Foreign Service Retirement System/Foreign Service Pension System Basic benefit, or other defined plans. This does not include salary off-set for re-employed annuitants since salary off-set is a reduction in and considered basic pay for the purpose of retirement and life insurance deductions). |
Social Security Tax (OASDI) | |
Medicare Tax | |
Federal Income Tax | |
Basic Health Insurance Premium | This includes Federal Employees Health benefits premium - - pre or post tax - - or a premium for a similar benefit under another authority. |
Basic Life Insurance Premium | This includes Federal Employee’s Group Life Insurance - - FEGLI - - or a premium for a similar benefit under another authority. |
State income Tax | |
Local Income Tax | |
Collection of Debts Owed to the U.S. Government (see note below) |
This includes tax debts, salary overpayments, salary advances, travel advances, debts that may or may not be collected, debts collected via the Treasury Offset Program, etc.), in the following order:
|
Court-Ordered Collections/Debts | In order as follows:
|
Optional Benefits | In order as follows:
|
Other Voluntary Deductions and/or Allotments | In order as follows:
|
IRS Paper Levies |
Note: Priority of Deductions versus Net Pay Exclusions – The Order of Precedence determines which authorized deductions will take priority in calculating an employee’s salary payment when gross pay is insufficient to allow all deductions. This is not the same as determining the net amount of pay that is subject to a particular deduction. Pay applied toward certain other deductions may be excluded in determining net pay from which a deduction is made. However, this does not mean that those other deductions take priority in the order of precedence. For example:
a. The Federal income deduction is deducted from the net amount of taxable pay. A TSP contribution is pre-tax; that is, it is excluded from taxable pay. However, the Federal income tax deduction takes priority over the TSP deduction in the order of precedence.
b. A court-ordered alimony payment is deducted from the net amount of “garnishable” pay. A TSP contribution is excluded from the net amount of garnishable pay. However, the alimony payment takes priority over the TSP deduction in the order of precedence. (Garnishment is a statutory proceeding in which a person’s property and/or cash is taken and applied to the payment of a debt. State and Federal tax limit the amount of pay that can be garnished.)
Reviewed and updated November 8, 2019