Which U.S. law introduced federal income-tax withholding from workers’ paychecks in 1943?

The Current Tax Payment Act of 1943 introduced federal income-tax withholding from U.S. workers’ paychecks.

Before withholding became standard, many Americans paid federal income tax in installments after earning income. During World War II, the federal government needed dependable and faster revenue. The 1943 law shifted collection toward “pay as you go,” requiring employers to withhold estimated income tax from wages and send it to the government.

The system made tax payments more regular and greatly improved federal cash flow during wartime. Employees later reconciled the amount withheld with their actual annual liability through tax returns. If too much had been withheld, a refund could result; if too little, additional tax could be due.

Payroll withholding is sometimes confused with payroll taxes such as Social Security and Medicare contributions. The 1943 measure primarily established withholding of federal income tax, although employers may withhold several different taxes from the same paycheck today.