Is my employer right that we don't pay federal taxes until hitting a certain income threshold?

What your employer is referring to is probably the standard deduction, but he's misapplying it to payroll withholding which is incorrect. The standard deduction ($14,600 for single filers in 2025) reduces your taxable income when you file your return, but it doesn't mean employers should stop withholding federal income taxes until you reach that amount. Payroll withholding should happen on every check based on what you put on your W-4 form. Your employer should be calculating federal income tax withholding using IRS withholding tables, not just deciding not to withhold because you haven't hit some annual threshold. If your employer isn't withholding properly, you could end up owing taxes (and possibly penalties) when you file your return next year. I'd recommend checking your pay stub to confirm what taxes are being withheld and having a conversation with your employer about your concerns.

I had a similar issue with an employer misunderstanding tax withholding. I was totally confused when my paychecks suddenly changed, and the explanation I got made no sense. I ended up with a huge tax bill and spent hours trying to figure out what happened. I found this tool called taxr.ai (https://taxr.ai) that analyzes your pay stubs and tax documents, then explains in simple language if something's off. I uploaded my weird paystubs and it immediately flagged the withholding issues. It showed me exactly what should have been withheld vs what actually was, and even generated a letter I could show my employer explaining the proper withholding requirements. The tool also gives you an estimate of what you might owe at tax time based on the current withholding pattern, which was super helpful for planning ahead.

Just wanted to update after trying that taxr.ai site from my earlier comment. I was skeptical, but it was actually really helpful for my situation. I uploaded my last few pay stubs and it immediately showed me that my employer was under-withholding federal taxes by about $45 per check. The explanation was super clear - showed exactly how the withholding should be calculated based on my W-4 selections. It even created a document explaining the withholding requirements that I could show my boss without making it awkward or confrontational. My employer actually thanked me for bringing it to his attention since he was new to doing payroll and didn't realize he was setting it up incorrectly. Now my withholding is correct and I won't get hit with a surprise tax bill next year!

I'm seeing a lot of good advice about the withholding issue, but I want to add that you should also consider calling the IRS directly to report this. If your employer is doing this for everyone, it could be a much bigger problem affecting lots of people. Unfortunately, reaching the IRS by phone can be incredibly frustrating. I spent almost 4 hours on hold last time I tried. Then I found this service called Claimyr (https://claimyr.com) that gets you through to an IRS agent usually within 15 minutes instead of hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I used it when I had a similar withholding issue with a previous employer and got to speak directly with an IRS representative who confirmed they were handling things incorrectly and advised me on next steps.

I have to admit I was totally wrong about Claimyr in my previous comment. After reading more experiences here, I decided to try it with my federal tax withholding issue. I was really skeptical it would work, but I was desperate after spending 2+ hours on hold with the IRS myself. The service actually connected me with an IRS representative in about 12 minutes. The agent confirmed that my employer was incorrectly applying withholding rules and gave me specific information about employer responsibilities that I could share with my boss. They also recommended filing a Form W-4 again with my employer to ensure proper withholding going forward. Saved me hours of frustration and gave me the confidence to approach my employer with official information. Sometimes being wrong about something is the best outcome!

An important thing to note - if your employer continues not withholding properly after you've brought it to their attention with correct information, you can file Form 8919 "Uncollected Social Security and Medicare Tax on Wages" with your tax return. This helps protect you when employers aren't handling payroll taxes correctly. Also, check if they're withholding state taxes properly. Often when federal withholding is wrong, state withholding might be calculated incorrectly too.

I work in a similar situation at a small business and your boss is completely wrong lol. Some restaurant owners just make up stuff about taxes that sounds right to them without actually learning the rules. My boss once tried to tell us we didn't need to report cash tips under $20 per shift because "the IRS doesn't track small amounts" which is total BS!! Just be super careful and maybe look into making your own quarterly estimated tax payments to cover what he's not withholding.