IRS Wage Levies on Bonuses, Commissions and Severance Pay

People who are paid a base salary plus something else get an unpleasant surprise when the IRS levies their wages. The levy does not stop at the base salary. It reaches the bonus. It reaches commissions. It reaches severance on the way out the door.

That does not mean you get nothing. It means you need to understand how the exempt amount applies to pay that does not arrive on a neat schedule.

What counts as wages for a levy

IRC 6331(e) makes a levy on salary or wages continuous. IRM 5.11.5.1.1 explains that the term salary or wages includes compensation for services paid in the form of fees, commissions, bonuses and similar items. IRM 5.11.5.3 repeats it: wages and salary include fees, bonuses, commissions and similar items.

So a Form 668-W served on your employer captures your regular paycheck and the bonus check. Separate payment, same levy.

Bonuses

A bonus paid with your regular paycheck simply makes that paycheck bigger. You still get one exempt amount for the pay period, so almost all of the bonus goes to the IRS. IRM 5.11.5.4.6 states the principle in the severance context: if two payments are received for the same period, the taxpayer does not get the exempt amount twice.

A bonus paid on its own date, outside the regular payroll calendar, is where Treasury Regulation 301.6334-3(d)(3) can matter. That rule covers wages paid on a one-time or recurrent but irregular basis that is not tied to an established payroll period. The exempt amount equals the weekly exempt amount multiplied by the number of full weeks, up to 52, to which the payment is attributable. If you are already receiving the exemption for those same weeks through your regular paychecks, you do not get it again.

Practical point: if a large bonus is coming and you are working on a release, move fast. Money paid to the IRS under the levy is applied to your account and is hard to get back.

Commissions

Commissions are wages for levy purposes. IRM 5.11.5.3 goes further for real estate agents: it tells IRS employees to use Form 668-W when serving a levy on a real estate brokerage to capture agents’ commissions, because commissions paid to a salesperson have been treated as salary or wages, which makes the levy continuous.

For commission-only workers, the exemption question gets interesting. If commissions are paid on an established schedule, such as twice a month, the regular Pub. 1494 figure for that period applies. If they are paid irregularly when deals close, the regulation’s irregular-payment rule looks at how many full weeks the payment is attributable to. The regulation’s example: a worker with a $100 weekly exempt amount is paid a flat $1,500 fee for a 10-week task. The exempt amount is $1,000 and $500 is subject to levy.

For 2026, a single filer’s weekly exempt amount is $309.62 under Publication 1494 (Rev. 12-2025). If a commission check represents eight weeks of work and no other wages were paid for those weeks, the exempt amount would be eight times the weekly figure. Document what the commission covers. Your employer’s commission plan and the deal dates are your evidence.

Severance

IRM 5.11.5.4.6 walks through severance with examples, and they are worth knowing:

• Severance paid over time. Ten weeks of severance paid every two weeks for ten weeks: two weeks’ exempt amount comes off each check, exactly as if you were still working.
• Severance paid in a lump sum but attributable to a period. Ten weeks of severance paid in one payment after you leave: the payment is attributable to ten weeks of pay, so you get ten weeks of exempt amount. The IRM describes this as the employer making an advance payment instead of a series of checks.
• A lump sum not attributable to a period. An incentive payment to retire early, or $1,000 for each year on the job: the exempt amount is based on your regular pay period, or one week if there is none. The IRM is blunt: a person getting $10,000 for ten years on the job does not get ten years of exempt amount.
• Last paycheck plus severance on the same day. You get the exempt amount once.

The lesson is that the paperwork describing your severance matters. A severance agreement that ties the payment to a number of weeks of pay produces a much larger exemption than one that describes it as a lump-sum incentive. If you are negotiating separation terms while under a levy, that is worth raising with whoever is advising you on the agreement.

Does the levy end when the job ends?

A wage levy is served on a particular employer and reaches what that employer owes you. When your employment ends and the last paycheck and any severance are paid, the employer generally has nothing more to send. The debt, however, is still there. The IRS can levy the next employer, and penalties and interest keep running. Losing the job is a change in financial condition that may support Currently Not Collectible status or a revised payment arrangement.

Unemployment benefits are a separate matter. IRC 6334(a)(4) lists unemployment compensation among the property exempt from levy, although IRC 6334(f) and IRC 6331(h) allow certain continuous levies on specified payments, including unemployment benefits, of up to 15 percent if the IRS approves the levy under that subsection.

Partners and recurring service payments

IRM 5.11.5.3 also notes that periodic payments made on a recurring basis to a partner as compensation for services rendered to the partnership constitute salary or wages subject to a continuous levy. If you are a partner receiving recurring payments for services, expect the same treatment as an employee’s paycheck.

What to do if a big payment is coming

1. Know the date. Find out when the bonus, commission or severance will be paid.
2. Know the structure. Get the plan document or agreement that shows what period the payment covers.
3. Return or update your levy statement so the base exemption is right. See the statement guide.
4. Work the release before the payment date. An installment agreement requires release under IRC 6343(a)(1)(C). A large payment may also let you pay a meaningful lump sum toward the balance on your own terms rather than having the levy grab it.
5. If the payment is your only cushion for basic expenses after a job loss, that is a hardship fact. See economic hardship release.

The levy does not care what the payment is called. The exemption does. Read the paperwork before payday.