HopefullyInLawSchool
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LSDefine
Simple English definitions for legal terms
personal exemption
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A quick definition of personal exemption:
A personal exemption is a deduction allowed for an individual taxpayer's income. It reduces the amount of income that is subject to taxation. It is like a special allowance given to taxpayers to help them reduce their tax burden. It is different from a dependency exemption, which is a tax exemption granted for each dependent whose gross income is less than the exemption amount and for each child who is younger than 19 or, if a student, younger than 24.
A more thorough explanation:
A personal exemption is a deduction allowed from an individual's adjusted gross income for tax purposes. It reduces the amount of income that is subject to taxation.
- For the tax year 2020, the personal exemption amount is $4,300.
- If an individual's adjusted gross income is $50,000 and they claim a personal exemption of $4,300, their taxable income would be $45,700.
These examples illustrate how a personal exemption can reduce an individual's taxable income, resulting in a lower tax liability.