exemption

1. The act or an instance of exempting.
2. The state of being exempt; immunity.
3. One that is exempted, especially an amount of income that is exempted from taxation.

A deduction allowed by law to reduce the amount of income that would otherwise be taxed. An exemption is based on a status or circumstance rather than economic standing.

Investopedia Says:
There are two types of exemptions: personal and dependency.

An example of an exemption is the reduction in taxes you are granted for the dependent children (under the age of 18) living with you.

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Find out what requirements must be met and how it is done. Deducting Losses on Your IRA Investments

1. Deduction allowed a taxpayer because of the taxpayer's status or circumstances rather than because of specific economic costs or expenses during the taxable year. For example, a married couple having three children are allowed five personal and dependency exemptions by federal income tax laws, one for each person, on their Joint Tax Return. The exemptions reduce the amount of income upon which the couple are taxed. The amount of the exemption is indexed for inflation each year. The indexed amount for 1999 was $2,750.

2. The Homestead Exemption, offered in many jurisdictions, reduces the value of real estate (usually the principal residence or Domicile) that would otherwise be subject to an Ad Valorem Tax.

3. The maximum Alternative Minimum Tax exemptions for 1999 were $45,000 for married filing jointly, $33,750 for single or head of household, and $22,500 for married filing separately. The maximum exemption for corporations was $40,000. The exemptions are phased out for Alternative Minimum Taxable Income in excess of $330,000 (joint return), $247,500 (single or head of household return), and $165,000 (married, filing separately).

An amount provided by law that reduces taxable income or taxable value.
Example: Personal exemptions, generally based on the number of people in a household, reduce taxable income.
Example: Homestead exemptions, offered in many jurisdictions, reduce the value of real estate that would otherwise be subject to Ad Valorem Tax.

Definition: freedom from a responsibility
Antonyms: accountability, answerability, liability, responsibility

A deduction allowed to a taxpayer having dependents, rather than because of specific economic costs or expenses incurred during the taxable year. I.R.C. §151. Personal exemptions are allowed for the taxpayer, and for a spouse if a joint return is filed. Additional exemptions are allowed for each qualified dependent. The annual amount of the exemption deduction is adjusted for inflation. An individual whose adjusted gross income exceeds a specified threshold amount must reduce the amount of otherwise allowable personal exemptions. See dependency exemption.

Look up exemption or exempt in Wiktionary, the free dictionary.

An exemption such as a Tax exemption allows a certain amount of income or other value to be legally excluded to avoid or reduce taxation.

Exemption may also refer to:

• Exemption (church), an exemption in the Roman Catholic Church, that is the whole or partial release of an ecclesiastical person, corporation, or institution from the authority of the ecclesiastical superior next higher in rank
• grandfather clause, an exemption that allows a pre-existing condition to continue, even if such a condition is now prohibited from being begun anew
• exempt employee, is one who is exempt from the Fair Labor Standards Act, i. e. is not entitled to overtime pay and other worker's benefits stated in the FLSA

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