How to Resist the Federal Income Tax by Getting Under the Tax Line

  1. Introduction
  2. Is this method right for you?
  3. How The DON Method works
  4. Path 1: Get your income out of the “taxable income” category
  5. Path 2: Use credits to eliminate your tax liability
  6. Do the math!
  7. Make the adjustment!
  8. Conclusion and Example


This guide shows you how to stop paying federal income tax in the United States, legally and by-the-book, by keeping your taxable income low and by qualifying for certain credits. I call this “The DON Method” (short for “Don’t Owe Nothin’ ”).

This guide is for people who are considering tax resistance but aren’t sure how to go about it. It may also be useful to people who simply want to pay less federal income tax, whatever their motives.

IMPORTANT: This guide was last updated in and is based on my understanding of tax law at that time. Tax law changes from year to year (and Congress sometimes changes it retroactively), and so my understanding may not be up-to-date. I am not an attorney or a tax expert. I’m sharing what I know, or what I think I know, and you’d be wise to get a second opinion on anything you read here.

This document is provided “as is” and there is no warranty of any kind, either express or implied. This document is intended to provide general information and is not intended to be applied to any particular facts nor to serve as legal advice. The author is not responsible for any errors or omissions or for any consequences of any reliance on this document.

Why I wrote this

Here’s a brief history of how I got interested in this subject and why I thought it was important to create this guide:

In I decided to stop paying federal income tax because I did not want to fund the government’s activities. I decided to do this by lowering my taxable income and by taking credits that reduced my income tax burden to zero — what I’m calling “The DON Method.”

I was surprised to learn that I could earn quite a bit of income, and live very comfortably, without paying federal income tax and without having to battle the IRS. I could play by their rules and still pay nothing.

Is This Method Right for You?

People resist taxes in many ways. The method you choose depends on your situation and on what you hope to accomplish. I cover only The DON Method in this guide.

Questions You Should Ask

Before you decide how to resist taxes, think about your situation, your motives, and your goals. For instance:

“Do I want to stop paying all federal income taxes, or just taxes that pay for things I disapprove of?”
Some people don’t object to being taxed, they just object to how the government spends some of that money. Some “war tax resisters,” for instance, don’t oppose taxes on principle, but do object to the gigantic military budget. Some of them protest by resisting only a percentage of their taxes, equivalent to the percent that goes to military spending. Others avoid paying taxes altogether, but then voluntarily pay a portion of what they would have paid in taxes for more useful things that they feel the government underfunds. The DON Method is more appropriate for you if you want to stop paying any federal income tax at all.

However, the DON Method only eliminates your federal income tax burden. You may still pay other taxes — for instance the payroll (FICA) tax. To avoid those taxes also, you must either choose another method or supplement this method.
“Would I be comfortable living on less income?”
If so, how much less? Many people can avoid paying federal income tax without living on much less. In , about 31% of income tax filers in the United States paid absolutely no federal income tax throughout the year. It’s just not that rare. But if you’re used to earning and spending a lot of money, or if you have big debts or other obligations, the DON Method might not work for you. Read on, though, because you may be surprised at how much you can earn and still pay no federal income tax.
“Am I willing to break the law?”
If not, don’t worry — DON is legal. But if you are willing to break the law, there are other tax resistance options you might find appealing. For instance, you could supplement The DON Method by earning income in the romantically-named “underground economy.” Or you could hide money in sneaky trusts and offshore accounts. Or you could file returns that falsely state your income and claim deductions and credits that you don’t actually qualify for. The sky’s the limit. Of course, you run the risk of getting caught and so forth.
“Do I want to fight for currently unrecognized interpretations of tax law?”
“Am I willing to risk the wrath of the IRS & courts?”
Some people use tax avoidance methods that aren’t black-and-white illegal, but are certainly frowned on by the authorities. For instance, some people claim that they can’t pay taxes because they are obeying a higher law like that described in the Nuremberg Principles. Others claim the income tax isn’t a legal obligation because no law authorizing it was correctly passed, or because such a law would be unconstitutional. The IRS and the courts are not sympathetic to such arguments, but they occasionally meet with limited success. The advantage of methods like these is that you earn as much income as you like, you don’t have to fuss about deductions and credits, and you still don’t pay any taxes. The disadvantage is that the government may eventually crush you like a grape.

The DON Method is not like those methods. The DON Method plays by the IRS’s own rules as it defines them.
“Is it important that my tax resistance be a protest — a confrontation with the government?”
Because The DON Method is legal and by-the-book, some people feel it does not adequately express their opposition to the government. If your blood pressure rises every time someone asks for your Social Security Number, you’ll probably resent the paperwork and the attention to legal niceties that are required to get the most out of The DON Method. (But it’s really not all that bad.)

You can certainly combine The DON Method with another form of protest that is more confrontational. But if you don’t think the government has any right to make you choose between carefully regulating your income and paying taxes on it — or to force you to make a yearly confession of your income and expenditures in the first place — this might make you want to resist taxation in a more in-your-face manner.

How The DON Method Works

The DON Method takes two paths:

The federal income tax doesn’t tax all of your income, just your “taxable income.” Path #1 is to remove as much of your income as possible from the “taxable income” category.

Once you’ve done that, you’ll have some “taxable income” and some amount of tax owed on it. But you can offset this tax, or even reverse it into a “refund,” by using various credits. Path #2 is to qualify for these credits.

You use those paths to figure out how much money you can earn and spend without owing income tax. Then you look at your lifestyle and your goals and adjust them if necessary so that you can live within your means at that income level.

The remainder of this guide covers this in greater detail. By reading this guide you will be able to investigate for yourself if The DON Method will work for you.

Path 1: Get Your Income Out of the “Taxable Income” Category

When you fill out a 1040 form, your “income” cascades through several levels, changing a little each time: from income to “total income,” then to “adjusted gross income,” and finally to “taxable income.” Each stage gives you the opportunity to prevent some of your income from being taxed.

From income to “total income”

Income is just whatever money you brought in during the year. But “income” according to the IRS is not so simple.

Some income is invisible to the tax collector. For example, if you had money deducted from your paycheck to go into a 401k retirement account or a Health Savings Account, the IRS doesn’t include that money in your income.

There are other ways to shield your money from taxes. For example, at one job, I had money withheld from my paycheck to buy my transit passes, and that money also did not register as part of my “total income.”

Keep your eye out for opportunities like this. Ask your employer what pre-tax contributions you can make. Consider switching to a variety of health insurance that qualifies for Health Savings Accounts, and then shelter some of your income by saving it to pay health costs.

Your “total income” also includes any “capital gains” you made during the year — for instance if you sold stock or property at a profit. You can also subtract some capital losses when you calculate your “total income”.

If you run your own small business or do gig-economy work, this profit or loss is also part of your “total income.” Some tax resisters find that having such a business helps them to regulate income — in years when income gets too high, they invest more money in their business and take a business loss or reduce their business profit; in years when income is low, they put more effort into making their business profitable. (You can’t run your business at a loss every year, though, or the IRS will decide that what you’ve got isn’t a business so much as a hobby, and your deduction may go away, retroactively.)

Among the other things that are part of your “total income” are interest, dividends, and unemployment compensation.

This is just a brief introduction to some of the ways your “total income” is calculated. I haven’t gone into it in much detail because I’m really not qualified to go into specifics about things like business expenses, and such a discussion would be too long for this guide.

From “total income” to “adjusted gross income”

“Adjusted” means “lowered” because all of the adjustments are deductions (so use as many as you can). You use your “adjusted gross income” to calculate some of the credits that I cover in “Path 2” below — and in general, the lower your adjusted gross income is, the better.

One of the best of these deductions is for a tax-deferred Individual Retirement Account (IRA) — not only because you can deduct the money you put in (typically, up to $6,000) from your “total income,” but because when you put money into a retirement account you can qualify for a generous credit (which I’ll cover in the “Path 2” section below). Be aware, though, that there are forms of IRA, such as the “Roth IRA,” that aren’t tax-deferred and that won’t lower your adjusted gross income. Ask about the tax ramifications before you invest.

If you run your own business or are otherwise self-employed, you may be able to take deductions here on things like your health insurance costs (depending on the state of the tax law, you may be able to take this as a simple business expense, or as a separate tax line item), and part of the cost of your payroll taxes (FICA).

Other deductions are available for interest paid on student loans and for educational supplies bought by teachers. These aren’t the only deductions, and I haven’t covered any of them in much depth or detail. It’s just an overview to give you a feel for what is available.

From “adjusted gross income” to “taxable income”

There is one remaining deduction: either the itemized deduction or the standard deduction. Once you subtract this, you are left with your “taxable income.”

By itemizing, you can take deductions for things like charitable donations, medical expenses, state taxes, and such. But for most people, the standard deduction is higher than their itemized deductions would be, so they’re better off taking the standard deduction instead.

Once you’ve made this deduction, you have your “taxable income” and you can look in the tax table to find out how much you’re supposed to pay. But don’t get out the checkbook yet because you’re only half-done.

Wait a minute — what about the “alternative minimum tax?”

In order to keep well-off people from taking a lot of deductions and not paying any taxes (in other words, to make sure that you can’t make too much money while doing The DON Method), the “alternative minimum tax” was invented.

If your “adjusted gross income” is above $50,000, you may have to worry about this. However, if it is that high, you probably won’t slip under the tax line anyway, so I’m not going to cover this in any more detail here. For most everybody using The DON Method, the “alternative minimum tax” won’t be an issue.

Path 2: Use Credits to Eliminate Your Tax Liability

Many tax credits exist. Credits are not deductions that you subtract from your income. Instead you subtract them directly from the tax you would otherwise owe. For example, if the tax table says you owe $750, but you qualify for a $500 credit — you subtract that credit directly from the tax: $750 − $500 = $250.

One credit is for your education expenses. Another is for any income tax you’ve paid to a foreign government. Another is for your child care or dependent care expenses. You also get a per-child “Child Tax Credit,” and can also take a credit for any adult dependents you have.

My favorite credit is the retirement savings contributions credit. Remember how, when you put money into tax-deferred retirement account, you were able to deduct it from your income before you calculated your tax? Now it gets better. You can take a percentage of the amount you put into retirement accounts as a credit as well. If your “adjusted gross income” is low enough, that percentage is 50%, and your credit is as high as $1,000, which can cut your income tax to zero.

The “Earned Income Tax Credit” is a special creature. Most credits allow you, at best, to lower your tax to zero. The Earned Income Tax Credit allows you to lower your tax below zero so that the government actually owes you money. This sort of credit is called a “refundable credit.”

In order to qualify for the Earned Income Tax Credit, your adjusted gross income must be very low (but you must have earned some income during the year). It’s easier to qualify if you have at least one dependent child. Millions of people qualify for the EITC, but it does typically require having a very low income — lower than is strictly necessary for The DON Method.

Do the Math!

There’s one way to find out if you can stop paying income tax by using the DON Method: There is no substitute for sitting down and doing the math, either by yourself or with the help of a professional.

The IRS has some helpful information at their web site. If you’re adventurous, you can create a spreadsheet to simulate your tax return, or you can get specialized tax software, or you can sit down with a tax specialist to run the numbers.

Try out different combinations of earnings, deductions, and credits to learn which would work best for you, and then figure out what your budget would be for the year if you follow through on that plan.

Make the Adjustment!

You’ll probably find that you don’t need to lower your income as much as you expected to stop paying federal income tax. But you may find that, because you’ll be spending or saving some of your income in particular ways in order to qualify for deductions and credits, there is less left over than you’re accustomed to.

At this point you can either throw up your hands and cry out “how can I live on that?” or you can settle down and actually figure out how.

Keep in mind that what looks low to you probably looks like a fortune to the majority of people on earth — and that it probably doesn’t look bad to many of your fellow Americans either. Remember that about 35% of people who file taxes in the U.S. live under the federal income tax line, most just because they don’t make a lot of money — not because they’ve made a special effort to refuse to pay.

What would it take for you to live on less? It’s probably just a matter of spending less and spending more wisely. Maybe you have to get out of debt first, or give up an expensive habit or hobby. Or it may be more extreme: you may have to move to a less expensive home and change your lifestyle more radically. Maybe you have to convince your spouse or children to go along with your crazy plan first. Whatever that next step is, it’s probably something you can start working on today.

Additional Benefits of a Reduced Income

You may find other benefits to paying closer attention to your spending and lowering your income. For instance, even if your total income goes down, your hourly wage rises — you make more per hour because you’re not giving a cut to the government. You may also find that you don’t have to work as much — you can take more time off to do things you want to do.

Your state income tax may also fall to nothing or nearly nothing. You may discover that by lowering your spending, you’re simplifying your life, decreasing your environmental footprint, and reducing the influence of superficial consumerism in your life. If you’re a follower of Jesus, you may fear less his warning that “It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.”

The government taxes money not only as income, but also when you spend it (as excise and sales taxes), then again when some of it turns into profit where you spent it, and then again when that profit is used to pay more taxable wages or buy more taxed goods. If you spend less, you reduce the amount of money you push through this gantlet of taxation.


Now you know how to legally stop paying federal income tax, by lowering your taxable income and by qualifying for tax credits. And you know what to do next, in terms of research and lifestyle reassessment. To make things more vivid, I’ll conclude with a fictional example:


By September, Joe Taxmenot had earned $40,000 at his job. $6,000 in 401k contributions were deducted from his wages, along with $3,850 for his Health Savings Account, $3,060 for FICA tax, and $2,000 for federal income tax. Then he decided he didn’t want to pay federal income tax anymore and he began to try to get that $2,000 back by using The DON Method.

He quit his job and started a business doing freelance manuscript editing. He went through the paperwork and fees involved to get a business license, and he put some advertisements in magazines catering to authors and scriptwriters. By the time he finished with this, he’d spent $2,750 on his new business, but it started to pay off. He got his first of several freelance jobs in November, and his first check from a happy client ($1,800) arrived just before the end of the year.

He also sold some stock he’d bought. This brought in $1,250 in income (but he’d bought the stock for $5,000 so he really got hosed — $3,750 in losses). He can take $3,000 of those losses as a deduction this year and save the leftover $750 for next year.

Income ($40,000) − 401k deduction ($6,000) − Business Expense ($2,750) + Business Income ($1,800) − Capital Loss ($3,000) = $30,050 TOTAL INCOME

Joe’s been lowering his expenses because he knew he might quit his job, but he’s still kind of strapped for cash. He needs to put $6,000 into an IRA to make the DON Method work for him. He does some research and discovers that the IRS will let him take credit for putting money into an IRA before he actually makes the contribution, as long as he puts the money in before the tax filing deadline next year. So he declares the $6,000 contribution on his tax return in February, but waits until he gets his refund check from the IRS before he actually makes the contribution.

Total Income ($30,050) − Health Savings Account contribution ($3,850) − IRA ($6,000) = $20,200 ADJUSTED GROSS INCOME

Joe takes an ordinary standard deduction because when he calculated his itemized deductions they didn’t amount to much.

Adjusted Gross Income ($20,200) − Standard deduction ($12,950) = $7,250 TAXABLE INCOME

Joe looks in the tax table for the tax on $7,250: $725. He then fills out the Retirement Savings Contributions Credit form. Because his Adjustable Gross Income is $20,500 or below, he can take 50% of the first $2,000 that he put into retirement accounts (like his 401k and IRA) as a tax credit. This is a $1,000 credit. Alas, the IRS won’t let you take more of this credit than you owe in taxes, so it only eliminates the tax rather than converting it into a refund. However, Joe is satisfied and claims victory.

Income tax on $7,250 ($725) − Retirement Savings Contributions Credit ($725) = $0 tax owed

Joe files his return and soon gets a check for $2,000 from the federal government (the $2,000 that had been withheld from his wages for income tax). He remembers to put that check into his IRA as part of his $6,000 contribution. Over the course of the year, he’s put $12,000 away for retirement, put $3,850 away to pay his medical bills (or for retirement, if he stays healthy), and spent $2,750 to get his business off the ground. Subtracting the FICA that was taken from his paycheck, that’s left him $21,390 to spend however he wants, plus a business, plus $12,000 invested to spend in his old age and $3,850 to cover his health insurance deductible if need be. Not too shabby!

Wages ($40,000) + Stock sold ($1,250) + Business earnings ($1,800) − retirement savings ($13,000) − Health Savings ($3,850) − Business expenses ($2,750) − FICA ($3,060) = $21,390 free-and-clear

Joe figures he can live on $21,390 pretty easily, and can even save up a little for when he runs out of that rotten bubble stock and he has to squeeze things a little tighter. He figures he’ll probably be pretty good at living on the cheap by then, though.

Joe’s cousin Jane earns only $23,000 a year. By the time her taxes have been withheld from her wages — including about $1,000 in federal income tax — she has less free-and-clear take-home income than Joe does. She can’t believe that Joe, who brought in much more money than she did last year, and has all that savings to show for it, doesn’t have to pay any federal income tax at all. She’s going to go through the numbers herself and see if maybe she could try the DON Method too.