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Investments glossary

Exemption


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— Norman Cousins

An exemption is a deduction allowed by law to reduce the amount of income that would otherwise be taxed. The Internal Revenue Service (IRS) previously offered two types of exemptions: personal and dependent exemptions. But with the changes brought about by the 2017 Tax Cuts and Jobs Act, personal exemptions are disappearing until 2025. 1 In addition, the standard amount that can be deducted when filing nearly doubles: for couples, the number goes to $24,000 from $12,700; for individuals, it goes to $12,000 in deductions from the previous $6,350.2

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