Personal Exemption (Taxation) - Definition
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What is a Personal Exemption?
A personal exemption refers to the amount of money that a single taxpayer can claim as a tax deduction, this deduction is claimed on personal income and federal income tax. The amount an individual can deduct under personal exemption is based on the tax return or taxable income of the individual. As at 2017, the personal exemption for all taxpayers was $4,050 before the personal exemption was for the tax period of 2018 to 2025. The Tax Cuts and Jobs Act of 2017 eliminated personal exemptions which means that form 2018, individuals can no longer claim any deductions on their taxable income.
A Little More on What is a Personal Exemption
As a result of the new legislation given through the Tax Cuts and Jobs Act of 2017, taxpayers can not claim personal exemptions but are still eligible for standard deductions. Personal exemption give room for a single taxpayer to claim personal exemptions for themselves, for their spouses and other eligible dependents. This means that through a filing status, personal exemption can be claimed for all eligible relations of the taxpayer. If you are the head of a household, you could claim the exemption for all family members that are eligible. Married couples that file jointly can also receive deductions for themselves, their spouse and other eligible dependents. All claims for personal exemption must be made for individuals who are eligible for the tax deductions. For high-income taxpayers, their personal exemption is reduced to 2% for every $2,500 or a portion of their adjusted gross income that exceeds $261,500. The goal of personal exemption is to help resident taxpayers reduce their taxable income, thereby providing tax relief. The deduction that single tax filers or heads of household can claim vary and depends on the amount of the taxable income or the adjusted gross income.
References for Personal Exemption
https://en.wikipedia.org/wiki/Personal_exemptionhttps://www.taxpolicycenter.org/briefing-book/what-are-personal-exemptionshttps://smartasset.com/taxes/personal-exemptionhttps://www.investopedia.com Taxes Income Taxwww.businessdictionary.com/definition/personal-exemptions.html