Personal Exemption

DEFINITION of 'Personal Exemption'

The dollar amount that each individual taxpayer is able to deduct for him or herself or a dependent each year. A separate personal exemption is accorded to every man, woman and child in the U.S. that must file a return. For example the amount of the personal exemption was $3,700 in 2011 and $3,800 in 2012.

BREAKING DOWN 'Personal Exemption'

The amount of each personal exemption that may be claimed was formerly subject to an adjusted gross income phaseout. However, this phaseout was eliminated for tax years 2010, 2011 and 2012. Future legislation will determine whether or not it will be reinstated in 2013.

RELATED TERMS
  1. Exemption

    A deduction allowed by law to reduce the amount of income that ...
  2. Tax Exempt

    To be free from, or not subject to, taxation by regulators or ...
  3. SEC Form T-4

    An application for exemption from certain sections of the Trust ...
  4. Waiver Of Exemption

    A provision in a consumer credit contract or loan agreement that ...
  5. IRS Publication 501

    A document published by the Internal Revenue Service that covers ...
  6. Married Filing Separately

    A filing status for married couples who choose to record their ...
Related Articles
  1. Taxes

    Are You Missing Out On These Tax Exemptions?

    To lower your tax bill, make sure that you're taking all the exemptions that apply to you.
  2. Taxes

    8 States With Estate Taxes

    Understand the difference between the federal estate tax and state-specific estate taxes. Learn about some of the worst states with estate taxes.
  3. Taxes

    How To Claim A Dependent On Your Tax Return

    If you are a caregiver, get to know the rules for claiming a dependent before filing your taxes.
  4. Taxes

    Top Tax Issues For High-Net-Worth Individuals

    Wealth brings benefits, but from a tax perspective it creates special challenges. Here are some tax issues to pay attention to.
  5. Taxes

    How Much Will Your Taxes Rise Based On Your Salary?

    Find out how high your taxes will rise this year.
  6. Taxes

    New Baby, New Tax Break

    Delivering a new baby also delivers a $1,000 child tax credit - and that's just the start!
  7. Taxes

    Tax Credits And Deductions For Parents

    Your children can help you save on your taxes with these credits and deductions.
  8. Taxes

    11 Tax Deductions You Can't Actually Write Off

    These are some of the most common tax write-offs that you can't really claim.
  9. Taxes

    Personal Income Tax Guide: 6 Overlooked Deductions And Credits

    By Ken ClarkDue to the overwhelming and ever-changing nature of the U.S. tax code, most taxpayers can't name more than the three or four of the most commonly deductible expenditures. Not only ...
  10. Taxes

    Tax Avoidance Or Illegal Evasion?

    Find out how to avoid the most common tax filing mistakes and audit triggers, so you can deduct with a clear conscience.
RELATED FAQS
  1. What property / belongings can I keep after filing bankruptcy?

    Discover which types of property you can keep after filing bankruptcy by listing them as exempt from normal liquidation proceedings. Read Answer >>
  2. Who is exempt from paying Social Security taxes?

    Learn about the groups of people who qualify for exemption from Social Security taxes, and explore the process of applying ... Read Answer >>
  3. Transactions are exempt from registration where …

    Transactions are exempt from registration where … a. A sale, or offer of sale is made to ALL clients of a brokerage ... Read Answer >>
  4. Are ETFs required to pay out a percentage of income as dividends?

    The exchange-traded fund (ETF) is a relatively new investment vehicle, hitting the market in 1993. A fund company can create ... Read Answer >>
  5. Why do some oil refineries get tax exemptions?

    Understand why some oil refineries in the United States receive tax exemptions. Learn what is being done about it and who ... Read Answer >>
  6. How can I lower my effective tax rate without lowering my income?

    Discover how to reduce your effective tax rate without losing income by maximizing adjustments and deductions, earning tax-free ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center