Withholding Allowances: Are They Still Used on IRS Form W-4?

The IRS changed how tax withholding is calculated in 2020, affecting the use of withholding allowances. When starting a new job or adjusting tax withholding, you need to fill out IRS Form W-4. This form helps employers determine how much federal income tax to deduct from your paycheck.

If you haven't filled out a W-4 form in a while, you might notice the removal of the line that asked for the number of withholding allowances. This change simplifies the form, as many people were confused about what a withholding allowance was and how many to claim. The old pre-2020 W-4 form, which included this line, is no longer used.

What Were Withholding Allowances?

Before 2020, Form W-4 required you to claim a certain number of withholding allowances, which could be zero. The amount of tax withheld depended on how many allowances you claimed. Essentially, a withholding allowance represented an exemption that reduced the taxable portion of your wages.

"A withholding allowance is an exemption from tax for a portion of your wages."

Why Did the IRS Change the Form?

The change was made to make withholding more accurate and easier to understand. Removing allowances helped clarify the process, avoiding confusion for taxpayers.

Summary

Withholding allowances were a tax exemption method used before 2020 to reduce withheld taxes, but the IRS redesigned Form W-4 to improve clarity and accuracy by eliminating this concept.

Author’s summary: The IRS eliminated withholding allowances from Form W-4 in 2020 to simplify tax withholding and improve its accuracy, replacing the old system with a clearer approach.

TurboTax — 2025-11-02