26 USC 6334: What Property Is Exempt From an IRS Levy?
An IRS levy is governed by federal rules that limit seizure. Learn how the law distinguishes between assets and provides protections for personal property and income.
An Internal Revenue Service (IRS) levy is the legal seizure of property to satisfy an outstanding tax debt. This action is distinct from a lien, which is a claim against property that secures a debt but does not involve seizure. When the IRS determines a taxpayer has neglected to pay their taxes, it can levy property. However, federal law under 26 U.S. Code § 6334 recognizes that individuals need certain items to work and maintain a basic standard of living, so it exempts specific property from seizure.
Property with Specific Dollar-Value Exemptions
Federal tax law shields certain tangible personal property from IRS seizure, with some exemptions tied to a monetary value that is adjusted for inflation. One protection covers necessary wearing apparel and school books for the taxpayer and their family. This category does not have a specified dollar limit, but the exemption is limited to items considered necessities; luxury apparel, for example, is not protected.
The law also provides an exemption for fuel, provisions, furniture, and personal effects within a taxpayer’s household, including items like food and standard home furnishings. For 2025, the total fair market value of these exempt items is $11,710. A separate exemption exists for the books and tools necessary for a taxpayer’s trade, business, or profession, with an exempt amount of $5,860 for 2025.
When the IRS seizes property in these categories, an officer must appraise the items and set aside the exempt amount for the taxpayer. If the taxpayer disagrees with the valuation, they have the right to object. In such a case, the law requires the IRS to summon three disinterested individuals to perform an independent valuation of the property. This appraisal process is a safeguard to ensure the fair market value is accurately determined.
Exempt Income and Government Payments
Federal law also makes certain types of income and government payments entirely exempt from an IRS levy to protect funds for basic subsistence. One of the most common exemptions is for unemployment benefits. These payments, administered by state governments, are fully shielded from IRS seizure.
The law also protects payments from a range of other government programs. Other protected income sources include:
- Workers’ compensation payments provided to employees injured on the job.
- Certain annuity and pension payments, such as those under the Railroad Retirement Act.
- Any court-ordered judgments for the support of minor children.
- Certain service-connected disability payments for veterans.
- Specific public assistance payments.
- Assistance received under the Workforce Innovation and Opportunity Act.
- Undelivered mail addressed to any person.
The Exemption for Wages and Salary
Unlike some government payments, wages and salaries are only partially exempt from an IRS levy. The law protects an amount of income needed for basic living expenses, while the remainder is subject to collection. The exempt amount is not fixed; it is based on the taxpayer’s standard deduction and the number of dependents they claim.
When the IRS levies a taxpayer’s wages, it sends Form 668-W, Notice of Levy on Wages, Salary, and Other Income, to the employer. This form legally obligates the employer to withhold a portion of the employee’s pay and send it to the IRS. The form includes a statement that the taxpayer must complete and return to their employer to provide the information needed to calculate their exemption amount.
On Part 3 of Form 668-W, the “Statement of Exemptions and Filing Status,” the individual specifies their tax filing status and lists the number of dependents they will claim. The employer uses this information, in conjunction with tables in IRS Publication 1494, to determine the exact portion of the employee’s pay that is exempt. If a taxpayer fails to return this statement, the law requires the employer to calculate the exemption as if the taxpayer were married filing separately with no dependents, which results in a smaller protected amount.
Special Protections for Certain Assets
Certain assets are granted procedural protections that make them difficult for the IRS to seize, requiring additional legal or administrative steps. The most prominent of these is the taxpayer’s principal residence. The IRS cannot seize a person’s main home to satisfy a tax debt without first obtaining approval from a federal district court judge or magistrate. This judicial review process serves as a check on the agency’s power, forcing it to justify the seizure to a court.
This protection for a principal residence is not absolute and is subject to certain conditions. For instance, the protection does not apply if the tax liability is very small. If the total amount of the levy is $5,000 or less, the IRS is prohibited from seizing any real property used as a residence by the taxpayer or another individual. This rule prevents collection actions for relatively minor tax debts.
Similar protections extend to certain business assets. The IRS is barred from seizing tangible personal property or real property used in a taxpayer’s trade or business without first obtaining internal approval from an IRS district director or assistant district director. This administrative approval requirement ensures the decision to seize assets essential to a taxpayer’s livelihood is made at a senior level. These procedural hurdles for both principal residences and business assets mean that while these properties are not technically exempt, they are shielded from routine levy actions.