The New W-4 Explained: Old vs New Form
Updated for 2025–2026 · Educational guidance, not tax advice
In 2020, the IRS completely redesigned the W-4. Allowances are gone. Worksheets shrunk. Dollar amounts replaced almost everything. Here is what changed, and why it matters.
The big change: goodbye allowances, hello dollar amounts
The old W-4 (1987–2019) used a system of "allowances." Each allowance reduced the amount of income your employer would treat as taxable. You used the Personal Allowances Worksheet to count up to a number — commonly 0, 1, 2, or more. That number went in Line 5 of the form.
The new W-4 (2020–present) asks you to enter specific dollar amounts instead:
| Old W-4 (before 2020) | New W-4 (2020+) |
|---|---|
| Line 5: "Total number of allowances" | Step 3: Dollar amount of dependents ($2,000/child, $500/other) |
| Line 6: "Additional amount to withhold" | Step 4(c): Same concept, new location |
| Line 7: "Exempt" | Written in blank space below Step 4(c) |
| Personal Allowances Worksheet | Gone — replaced by Step 3 and Step 4 |
| Deductions and Adjustments Worksheet | Deductions Worksheet (page 3) — still exists, rarely used |
| Two-Earners/Multiple Jobs Worksheet | Multiple Jobs Worksheet (page 3) or IRS online estimator |
Why the IRS changed it
The Tax Cuts and Jobs Act of 2017 made sweeping changes to personal tax law:
- Personal exemptions were eliminated (they were the basis of "allowances")
- The standard deduction nearly doubled
- The Child Tax Credit doubled from $1,000 to $2,000 per child
- A new $500 credit for other dependents was created
With personal exemptions gone, the allowance system no longer had a mathematical basis. The IRS had to redesign the W-4 to match the new tax code. They used the redesign as a chance to make the form more transparent: instead of "claim 2 allowances," you directly enter "$2,000 for one child."
What stayed the same
- The form is still called Form W-4, "Employee's Withholding Certificate"
- You still give it to your employer, not the IRS
- You can still claim "Exempt" if you meet the two rules
- You can still submit a new W-4 any time your situation changes
Do I need to submit a new W-4 just because the form changed?
No. If you submitted an old W-4 (with allowance numbers) before 2020 and your situation has not changed, your employer will keep using that form. You do not need to convert.
You only need to submit a new W-4 if:
- You start a new job
- Your life changes (marriage, divorce, baby, etc.)
- Your withholding is way off and you want to fix it
When you do submit a new one, it must be on the current (2020+) form.
Mental model: old number = new dollar amount
If you are trying to replicate how you felt with the old form:
The five steps of the new W-4
- Step 1: Name, address, SSN, filing status (required)
- Step 2: Multiple jobs or working spouse (only if applicable)
- Step 3: Claim dependents (optional)
- Step 4: Other adjustments — other income, deductions, extra withholding (optional)
- Step 5: Sign and date (required)
Most people only fill out Steps 1 and 5. Those with kids add Step 3. Everyone else can leave the rest blank.