what is a withholding allowance 
a withholding allowance is an exemption that reduces how much income tax an employer deducts from an employee s paycheck and transmits to the irs on their behalf this exemption from withholding is tied to the personal exemption a federal tax break that was available to all taxpayers regardless of their expenses through 2017 the tax cuts and jobs act tcja of 2017 eliminated personal exemptions for the period from 2018 to 2025 as a result the withholding allowance has no current practical relevance but that could change in 2025 when the tcja changes end for now it is no longer used on form w 4 employee s withholding certificate which the internal revenue service irs completely redesigned employees in the united states fill out and submit form w 4 to their employers so that their employers know how much to withhold from workers paychecks investopedia nez riaz