The amount of Federal income tax decreases as the number of allowances increases.

Question

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Claiming more allowances on your W-4 form will reduce the amount of Federal income tax withheld from your paycheck. This is because allowances represent the amount of income that you expect to take as deductions, such as for dependents or mortgage interest, and reduce your taxable income. Therefore, more allowances mean less taxable income and less tax to withhold.

The Amount of Federal Income Tax Decreases as the Number