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.