A reduction to the amount of your gross income that would otherwise be taxed. The amount of the reduction is the same for everybody. There are two types of exemptions: personal and dependency. For example, if you are filing your own tax return and have two children, you have one personal exemption for yourself and one dependency exemption for each kid = three total exemptions. At the current amount of $3,900 per person, that’s $3,900 x 3 = $11,700 that you can take out of your gross income. (See also: Deduction)« Back to Glossary Index
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