HR Fast Facts: What Is the Difference Between Exempt From Withholding and Exempt From Taxes?

Learn the difference between an exemption from withholding and an exemption from taxes.

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Local Income Tax: What Employers Need to Know

There are 2 ways to claim exempt:

  • An employee who claims exemption from withholding is claiming they should not have withholding for that tax, but they may still have to pay the tax at the end of the year. Their employer should still report their wages.
  • An employee who claims exemption from taxes for a particular tax is claiming they should not have withholding because they will not have to pay that tax at all. Their employer should not report their wages.
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