"That's exempt. The IRS can't touch it." People say that about their homes, their retirement accounts, their furniture and their tools. Sometimes they are partly right about the levy. They are almost never right about the lien.
Exemptions answer the question "what can the IRS seize?" The lien answers a different question: "what does the government have a claim against?" Keep those questions separate and the rules make sense.
The lien has one exception, and you probably do not fit it
Section 6321 reaches "all property and rights to property." IRM 5.17.2.5.4 says that "with one exception, no property or rights to property belonging to the taxpayer is exempt from attachment of the federal tax lien." The exception comes from Treasury Regulation 301.6321-1, which provides that an interest in restricted land held in trust by the United States for an individual noncompetent Indian is not treated as property or a right to property of that individual.
That is the list. No exemption for homesteads, household goods, retirement accounts or tools in section 6321 itself.
State exemptions do not control
State law gives debtors exemptions from ordinary creditors: homestead protection, retirement account protection, wage exemptions, and more. IRM 5.17.2.5.4 says state laws exempting a debtor's property from creditors "do not affect the reach of the federal tax lien," and that a beneficiary's interest in a spendthrift trust remains property subject to the lien even though state law prevents the beneficiary from transferring it.
The Supreme Court has said the same thing more than once. In Drye v. United States, 528 U.S. 49, the Court said that "exempt status under state law does not bind the federal collector," and in United States v. Craft, 535 U.S. 274 (2002), it repeated that line in holding that the lien attached to one spouse's interest in entireties property even though state law shielded that property from that spouse's ordinary creditors. Craft is covered in liens on jointly owned property.
Levy exemptions are real, but they are levy exemptions
Section 6334(a) lists property "exempt from levy." Among the items:
- Necessary wearing apparel and school books.
- Fuel, provisions, furniture and personal effects in the household, plus arms for personal use, livestock and poultry, up to a dollar limit. For calendar year 2026, Rev. Proc. 2025-32, section 4.49, sets that limit at $11,980.
- Books and tools necessary for the taxpayer's trade, business or profession, up to a dollar limit. For calendar year 2026, the same section sets it at $5,990.
- Unemployment benefits and workers' compensation.
- Undelivered mail.
- Certain annuity and pension payments, including Railroad Retirement Act annuities and certain military retired pay annuities.
- Amounts necessary to comply with a prior court judgment for support of minor children.
- A minimum exemption for wages, salary and other income under section 6334(d).
- Certain service-connected disability payments and certain needs-based public assistance.
- Residences in small deficiency cases where the levy amount does not exceed $5,000, and, except as provided in section 6334(e), the taxpayer's principal residence and certain business property of individuals.
Section 6334(c) makes the list exclusive: no property is exempt from levy "other than the property specifically made exempt by subsection (a)," notwithstanding any other federal law.
Notice the scope. Every item is exempt from levy. Nothing in section 6334 says the lien does not attach. The two statutes do different jobs, as explained in tax lien vs. tax levy.
The principal residence
Your home is the clearest example of the gap between lien and levy. The lien attaches to your interest in it from the assessment date. But section 6334(a)(13)(B) and (e)(1) make a principal residence exempt from levy unless a United States district judge or magistrate approves the levy in writing, and the district courts have exclusive jurisdiction to approve it. For small cases, section 6334(a)(13)(A) exempts real property used as a residence when the levy amount is $5,000 or less.
So the house is encumbered by the lien, which matters immediately when you sell or refinance, but the IRS cannot simply seize it administratively the way it can levy a bank account. The lien does its work at the closing table. That is why a lien on a home often gets resolved through a payoff, a discharge or a subordination at the time of a transaction rather than by seizure.
Retirement plans
Retirement accounts generate the most confusion because employer plans carry strong protection against ordinary creditors. Section 401(a)(13) generally requires a qualified plan to prohibit assignment or alienation of benefits. But Treasury Regulation 1.401(a)-13(b)(2) says that a plan provision satisfying the anti-alienation rule "shall not preclude" the enforcement of a federal tax levy under section 6331, or collection by the United States on a judgment resulting from an unpaid tax assessment.
For lien purposes, the analysis follows Drye: what rights does the taxpayer have in the account under the plan and applicable law, and are those rights property? A taxpayer's vested right to an account balance, or to future payments, is the kind of right the lien reaches. IRM 5.17.2.5 adds that a taxpayer's unqualified fixed right to receive periodic payments or distributions is property to which the lien attaches regardless of when the payments will be made. The IRS's internal relationship table in IRM 5.17.2 also flags retirement plan survivor benefits and account balances as rights a taxpayer may have through a spouse or former spouse.
Whether and when the IRS actually levies a retirement account involves separate procedures and policy considerations under the levy rules. The point for this page is narrower: the lien attaches to the taxpayer's rights in the account, and that affects what happens at distribution, rollover, divorce or death.
Life insurance
In Drye, the Court described its earlier holding that a taxpayer's right under a life insurance policy to compel the insurer to pay the cash surrender value is property subject to the federal tax lien, even though state law shielded the cash surrender value from creditors. It also noted that no lien could attach to policy proceeds that were never within the insured's reach during his lifetime. Insurers get their own priority protection under section 6323(b)(9).
Exempt money after it changes form
One practical wrinkle: exemptions describe specific kinds of payments and property. Once money is paid out and changes form, for example a benefit check deposited into a regular bank account and mixed with other funds, the analysis can change. The lien was attached all along; whether the funds remain identifiable as exempt for levy purposes depends on the specific exemption and the facts. If you rely on exempt income, keep records that show where the money came from.
The same thinking applies to tools and household goods. The 2026 dollar limits in Rev. Proc. 2025-32 cap the levy exemption by value; anything above the cap is not exempt from levy, and none of it is free of the lien.
What this means in practice
- Exempt from levy does not mean free of lien. Plan for the lien on any sale, refinance, distribution or transfer.
- Levy limits still protect you day to day. The IRS cannot ignore section 6334 when it levies.
- Do not rely on state exemptions as a strategy against the IRS. Federal law decides what the lien reaches.
- The lien ends when the debt does. Payment or expiration of the collection period ends the lien, and with it the claim on exempt and non-exempt property alike.
Exemptions decide what the IRS can take. The lien decides what the IRS can claim.