IRS Levy Exemptions — What the IRS Cannot Seize — Definition Glossary

Defined by Sarah Mitchell, CPA | Reviewed by: James Okafor, EA | Updated May 2026

Full Definition

Federal law provides a limited set of exemptions from IRS levy — assets the IRS cannot legally seize even during enforcement. Key exemptions under IRC Section 6334 include: unemployment benefits; workers’ compensation benefits; certain annuity or pension payments (minimum exempt amount); income needed to pay court-ordered child support; a minimum amount of wages to sustain the taxpayer (approximately $900-$1,200 per week depending on dependents and standard deduction); and items appraised at $6,250 or less in business tools (tools of the trade). Notably, business operating accounts are not exempt — the IRS can levy business bank accounts without restriction. Primary residences require special approval (court order or approval from a U.S. District Court judge) before seizure, making home seizures rare but not impossible. For businesses, the most important practical exemptions are: the minimum wage exemption on personal wages/draws, and the tools-of-trade exemption for small equipment.

Why This Matters for Businesses With Tax Debt

Understanding IRS Levy Exemptions — What the IRS Cannot Seize is essential for any business owner navigating IRS enforcement or business tax debt. This term directly affects the resolution options available — including whether tax debt financing is a viable solution, how federal tax liens affect the business, and what the IRS can legally collect.

Related Tax Terms

• IRS Bank Levy
• IRS Seizure
• Notice of Levy

Is Your Business Facing This Situation?

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Sources: IRS.gov; Internal Revenue Code (IRC); IRS Publications 1, 594, 1660, 594. Tax Funds is a financing marketplace — not a lender, CPA firm, or law firm. Content is for informational purposes only and does not constitute tax or legal advice.