What Is a Personal Exemption & Should You Use It?

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Untangling tax laws can feel like navigating a maze, especially when you’re trying to decipher what feels like an entirely new language. When filling out your tax form, one term that used to play a major role in individual tax returns was “personal exemption.”

This exemption allowed individuals to deduct a specific amount from their total income when figuring their taxable income while completing their tax forms. It played a vital role in shaping tax liabilities and influencing financial strategies.

However, tax law changes have been quite significant and the Tax Cuts and Jobs Acts in 2017 eliminated this exemption. Now, that might change in 2025, but for tax year 2023, there are no personal exemptions. 

This major shift has likely changed how you approach your taxes. To help you get a better understanding of their impact, let’s take a look at the historical role of personal exemptions and what their absence means for current tax planning.

What is a personal exemption?

A personal exemption was a fixed deduction that was subtracted from your total income. You and each member of your family were entitled to one personal exemption. These personal exemptions would reduce your total taxable income.

The personal exemption helped reduce the burden of financially supporting yourself and dependents by reducing taxable income. However, there were a few exceptions. For example, if you could be claimed as a dependent, you couldn’t claim the personal exemption.

Even if you qualified for a personal exemption, it didn’t mean you were able to claim the full amount. Based on your adjusted gross income (AGI), you would begin to phase out at a certain threshold.

In the 2017 tax year, if a single filer’s AGI was above $261,500, the personal exemption was reduced. It would phase out completely for an AGI above $384,000.

Significant changes occurred with the implementation of the Tax Cuts and Jobs Act, signed into law in 2017. As a result, individuals could no longer claim a specific dollar amount as a personal exemption for:

  • Themselves
  • Their spouses
  • Their dependents

What is the personal exemption for 2024?

In 2024, the personal exemption continues to stand at $0. This is due to the provision enacted in 2017 through the Tax Cuts and Jobs Act.

The personal exemption isn’t applicable for tax returns beginning after December 31, 2017, and before January 1, 2026.

Table showing the personal exemption amount for 2017 through 2025.

How did the Tax Cuts & Jobs Act affect personal exemptions?

The Tax Cuts and Jobs Act was signed in 2017 and went into effect in 2018 (for the tax year of 2017.) Some of the provisions included in the bill will revert back after 2025 unless extended. ​​Key changes include new tax rates, increased standard deductions, and updates to various deductions such as:

  • State and local taxes
  • Mortgage interest
  • Charitable contributions

The child tax credit was expanded, and the “kiddie tax” has new criteria. Notable changes also affect:

  • Alimony
  • Alternative Minimum Tax (AMT)
  • Obamacare mandate penalties
  • Treatment of 529 Plan funds

Understanding these changes is crucial for navigating the evolving tax landscape. 

Among the other tax law changes, the Tax Cuts and Jobs Act eliminated personal exemptions starting after December 31, 2017, until January 1, 2026. Prior to the Act, taxpayers could deduct a personal exemption for:

  • Themselves
  • Their spouse
  • Each dependent from their adjusted gross income
Graphic titled “Personal Exemption Over the Years” that notes the changes in 2017, 2025, and 2026.

How have personal exemptions worked in the past?

In the past, personal exemptions were applied to each individual and the dependents that each individual could claim on their tax return.

Typically, each individual was entitled to one personal exemption for themselves. This only applied if they could not be claimed as a dependent on another taxpayer’s return. For the tax year of 2017, the personal exemption stood at $4,050 per person.

A dependent is a qualifying child or relative. See the past guidelines listed below.

Qualifying children under the old personal exemption rules

For a qualifying child:

  1. The eligible child would have needed to fall under one of these categories: your son, daughter, stepchild, foster child, brother, sister, half-sibling, step-sibling, or a descendent of any of them.

A child that was legally adopted would’ve also qualified.

  1. Specific age criteria should’ve applied: the child is either under 19 years old at the end of the year and younger than you or a full-time student under 24 years old at the end of the year and younger than you.

A child that was permanently and totally disabled would’ve qualified regardless of age.

  1. The child must have resided with you for more than half of the year. Exceptions existed for temporary absences due to illness or travel, newborns or deceased children during the year, kidnapped children, and those of divorced or separated parents.
  1. The child cannot have provided more than half of their own support for the year, including basic needs such as room and board.
  1. The child cannot have filed a joint tax return with any other person for the year.
Image of a mother on her laptop at the kitchen table while the father stands nearby holding the baby.

Claiming a child under the old personal exemption rules

In cases where two taxpayers both believed a child qualified under the preceding criteria, special tie-breaker rules would’ve apply:

  • If only one taxpayer was the child’s parent, they’re treated as the qualifying child of that parent.
  • If both parents claimed the child but filed separately, the IRS considers which parent lived with the child the longest during the tax year.
    • If the time was equal, the child would’ve been treated as the qualifying child of the parent with the higher adjusted gross Income (AGI).
  • If no parent was claiming the child, they’re treated as the qualifying child of the taxpayer with the highest AGI.
  • If no parent claimed the child, and they were eligible to do so, the child would’ve been treated as the qualifying child of the taxpayer with the highest AGI, provided it surpasses that of any eligible parents.

If all else failed, the taxpayers could have reached an agreement between themselves regarding who may claim the child.

Qualifying relative under the old personal exemption rules

This is also known as the “not qualifying child test.” The following criteria must’ve applied:

  1. A child cannot have been your qualifying relative if they already qualified as the qualifying child of another taxpayer.
  2. Your relative must have fulfilled one of two conditions: either resided with you throughout the entire year as a household member or have a specified relationship with you. While immediate family members naturally meet this requirement, it also encompasses half-siblings, step-siblings, and in-laws.
  3. The relative’s gross income for the year must not have exceeded the income threshold of the tax year.
  4. You must have contributed more than half of your relative’s total support during the year to meet this criterion.

In order to officially claim a dependent as a personal exemption on your tax return, you must have provided:

  • Their name
  • Social Security number
  • Relationship to you

If you’re using tax preparation software or a tax professional, you likely had to  provide the birth dates of your dependents.

In addition, personal exemptions could have also applied to married couples. For a married couple who filed  a joint income tax return, an exemption could have been claimed for the spouse.

If you were married and filing a separate tax return, the exemption could have be claimed for the spouse under the conditions that the spouse: 

  1. Had no gross income
  2. Wasn’t filing a tax return
  3. Couldn’t have been claimed as a dependent by someone else

What is the difference between an exemption vs. deduction?

Although both exemptions and deductions reduce your total taxable income, they differ from one another in significant ways.

The number of exemptions you could have qualified for depended on your filing status and the number of dependents you had. On the other hand, now you either claim a standard deduction or an itemized deduction. deductions are tied to your expenses. When you claim a standard deduction it is arguably easier because you don’t have to keep track of expenses and you take standard deduction for your filing status. The 2023 standard deduction is $13,850 for single taxpayers ($20,800 if you are filing head of household or $27,700 for those married filing jointly). Some common examples of deductions for those itemizing deductions include student loan interest deduction if you’re repaying student loans, contributions to qualified charitable organizations, or interest paid on your home mortgage.

 The standard deduction for single filers was $6,350 in the tax year 2017 when personal exemptions were still allowed. 

How can you lower your tax bill?

When it comes to taxes, there are plenty of nuances that make it difficult to navigate tax laws. Although you can’t use a personal exemption now, there are still other ways to save on your taxes and increase your tax refund.

Here are a few tips to ensure maximum savings come tax time:

Understand deductions

Effectively utilizing deductions is crucial to minimizing your tax bill. Identify any eligible expenses, maintain accurate records, and choose between itemized and standard deductions based on maximum benefit. Strategically time deductible expenses and leverage tax-advantaged accounts to reduce taxable income. 

There are a number of itemized deductions to consider looking into, such as:

  • Medical and dental expenses
  • Combined total of state and local income taxes
  • Mortgage interest
  • Charitable contributions
  • Casualty losses during a nationally declared disaster

Contribute to retirement

You can lower your tax bill by reducing your taxable income. One strategic move is reaching the maximum contribution amount for pre-tax plans like a 401(k) or IRA.

You may want to consider converting your traditional IRA to a Roth IRA. Unlike a traditional IRA, converted amounts from a Roth IRA typically don’t incur federal income taxes on qualified distributions, provided that:

  1. A minimum of five years has passed since your initial Roth IRA contribution or conversion.
  2. You are 59½ or older.

Explore different investment strategies

You might want to look into putting some of your income toward investments. With a buy-and-hold strategy, you can enjoy deferred capital gains.

Note that if your modified adjusted gross income reaches $200,000 or more ($250,000 or more if married filing jointly), you are liable for a 3.8% Net Investment Income Tax (NIIT). Depending on which is lower, this will apply to either:

  • Your net investment income
  • The amount of your modified adjusted gross income (MAGI) that surpasses the $200,000 threshold for single or head of household ($250,000 for married filing jointly)

Note that specific exclusions apply, so you’ll want to consult your tax advisor. 

Embrace clean energy

Enacted in 2022, The Inflation Reduction Act allocated billions for clean energy tax credits and other efforts to address climate change. As an individual, something to note is the potential for substantial tax credits potentially worth thousands of dollars for:

  • Purchasing new or used electric or hybrid clean vehicles
  • Installing residential energy property
  • Other environmentally friendly initiatives

There are some restrictions. You’ll want to consult with your tax advisor to determine which credits apply to you.

Work with a financial advisor or use tools

You should consider working with a financial advisor who is well-versed in tax matters. A financial advisor can help guide you on your taxable income. They can also advise you on taxes that might impact your investments.

You can also use any number of tax calculators or tools to speed up the process.

Understanding the nuances of tax laws is essential when it comes to tax planning. This includes personal exemptions. However, you don’t need to stress about understanding these tax laws. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.

32 responses to “What Is a Personal Exemption & Should You Use It?”

  1. My situation is, I live in mexico and I work in the US, I have 2 US citizen children who attend school in Mexico. My husband , their father stays at home to care for them. I gross less than $10,000 a year. How should I file.

  2. My friend is homeless. She has a daughter that is 12. I took her in 3/18/2013. Mom has not provided any income for her. I only have legal consent for her to live me. Washington state here…and wondering if i can claim her as she has no income also.

  3. Can I claim an exemption for my husband? He is not a US citizen, lives and works abroad so he has no US income and does not file a return in the US.

    • Hi – A spouse is never a dependent. What you should do instead is obtain an Individual Taxpayer Identification Number (ITIN) for your spouse so you can file a joint return. The ITIN is a substitute for a Social Security Number for non-citizens who need to file a tax return. The attached link has more information. Hope it helps. –Christopher http://www.irs.gov/taxtopics/tc857.html

  4. Hi Dinah-
    Per the IRS rules, a spouse is never considered a dependent. You will still get the $3,800 exemption for him, but he is not considered a dependent. You will not be able to claim Head of Household, as that filing status is for unmarried taxpayers only. You can file jointly with your husband, or file separate returns.

  5. my husband is disabled collecting ss, i work full time. can i use him as a dependet an can i claim head of house hold on my 2012 tax return, i will be using turbo tax as i have for the past 5 years thanks.

    • Hi Dinah-
      Per the IRS rules, a spouse is never considered a dependent. You will still get the $3,800 exemption for him, but he is not considered a dependent. You will not be able to claim Head of Household, as that filing status is for unmarried taxpayers only. You can file jointly with your husband, or file separate returns.

  6. I care for my mom and has been living with me, going on 3 years, she gets SSI, $905 monthly and is a U.S. Citizen. My husband is the only one working and we have 2 children. Do I need to charge my mom room and board and her share of utilities to be able to claim her as a dependent?

    • Hi Karen,
      Your daughter could not be claimed as a “qualifying child”, because she would not meet the age test of being under 19 at the end of 2010, but you could claim her as a “qualifying relative” as long as she meets the support and gross income test as follows:
      -Support – you have to provide over half of her support during the year
      -Gross Income – she could not have made over $3,650 in 2010
      -She must be a U.S. Citizen, U.S. National, or Resident Alien.
      If she meets these test you can amend your tax return, but make sure she did not file and claim an exemption for herself and no one else claimed her.

      Thank you,
      Lisa Greene-Lewis

  7. Hello, I have a quailifing dependant question….I have a friend down on his luck and hasn’t worked all year due to medical problems can i claim him? He has lived with me all year and I have paid all of his living exspenses

    • Hi Nicki,
      Yes as long as he meets the following tests:
      -You provided over half of his support
      -He did not earn over $3,700 gross income
      -He is a U.S. Citizen, U.S. National, or resident alien
      -No one else is claiming him
      Thank you,
      Lisa Greene-Lewis

  8. My 19 year old son lived with his girlfriend in the different state for the whole year. He doesn’t work but I am paying for his medical and dental insurance and sending him some money. Can I claim him as my dependent?

    • Hi Samsone,
      He may qualify as a “qualifying relative” since he doesn’t live with you, but the main test he would have to pass is you would have to had provided over half of his support for 2011. Compare the amount of support you paid to the amount of support he received from other sources, if you provided over half of the support you can claim him as long as no one else can claim him, he made under $3,700, and he is a U.S. Citizen, U.S. National, U.S. resident alien, or resident of Mexico or Canada.
      Thank you,
      Lisa Greene-Lewis

  9. My daughter is a freshman in a college out of state can i claim the airline tickets to and from home during school breaks also can i claim hotel expenses during orientation period before school commenced, She is on a full ride scholarship i dont pay tuition except for minor expenses. What can i claim?

    • Hi Meyi,
      Unfortunately you cannot claim travel related expenses to and from college. You would only be able to deduct eligible education expenses such as tuition paid, books, and materials directly related to her classes. You can claim her as a dependent if she is under 24 and a full-time student, as long as she doesn’t file a tax return and claim an exemption for herself and no one else claims her.

      I hope this helps you!
      Thank you,
      Lisa Greene-Lewis

  10. So, let me see if I understand this correctly. I work and my wife works. No one else claims us as dependants. We are married and filing jointly. We have one child who is one year old and is completely dependent on us (passes the dependant tests). I can claim one exemption for myself, one exemption for my wife, and one exemption for my child, for a total of three exemptions? This is before I even consider our standard deductable and/or other credits? Please respond, because your response could determine the size of my 2011 tax refund. Thank you!!!

    • Hi Alex,
      That is correct. You can also see if you qualify for itemized deductions vs. standard deductions.

      Thank you!
      Lisa Lewis

  11. We recently moved my 88 yr old dad in with us as he has fallen several times and really shouldn’t live alone anymore. He gets SS and a small amount of retirement. My question is, will we be able to claim him as a dependent this year?

    • Hi Gina,
      He could not be claimed as a “qualifying relative”, because he most likely would not meet the gross income test. Gross income is any income not exempt from tax and it has to be less than $3,700 for 2011. In addition, you generally must provide more than half of a person’s support. You would have to take his SS and retirement into consideration.

      Thank you!
      Lisa Lewis

  12. Hi, I start work in september 2011, my son was born March 15 2011… I have not worked all year. i want to know if i would be able to claim him as a dependent on my income tax 2012. Do you have to make a certain amount or been working a certain amount of time in order to claim. How much might i be able to get if i do claim him????????

    • Hi Sparkle,
      First, let me apologize. I responded to your comment on 9/1, but our responses made in September were not posted due to our blog enhancements so I am redoing those responses.

      Yes, you would be able to claim him as a dependent on your 2011 tax return. You do not need to make a certain amount to claim him. Just remember you must have a valid social security number for him. You will get a deduction of $3,700 for him and depending on your income you may be able to take advantage of other credits and deductions related to having a dependent.

      Congratulations on your baby and new job!
      Lisa Lewis

  13. My mother in law wants to claim one of my children. I am married and have a 2 year old and will have a new baby in Nov. We were laid off in may and got our last check in April. My mother in law gives us dinner every night and we live in the cabin next door. We paid the electric bill as our rent every month but haven’t been able to since April. We are planning to move in the next month or two and start receiving financial aid for my husband going to school. We have already filed his fasfa for the upcoming year and states that we will be claiming both our kids. If she does this then it will screw up my husbands financial aid ect. I plan on still claiming both of my kids regardless. what will this do? Is it ok for her to do this? What should I do? Allow her to claim one? Fight it? She owes money on her taxes and that’s the only reason she wants to do this.

    • Hi Allison,
      If you claim both of your kids then your mother-in-law cannot claim them. The IRS checks for duplicate social security numbers being used and will only allow one taxpayer to claim a dependent so you will have to come to an agreement on who claims one or both children.

      I hope this helps you!
      Thank you,
      Lisa Lewis

  14. Joanie.

    If you join an an MlM Company. Anything you do to promote or try to move the business forward will be a deduction. Please check out out blog for more tips.

  15. It should be if some is paying all of the bills in the house of the dependent and they donot contribute to the house than the big bread winner should be able to take the deductions.

  16. CONFUSED: My 21 yr old daughter who is separated from an abusive spouse, and her 2 year old (our grandchild, who was with her 365 days, 0 with father) lived with us part of the year and separate from us part of the year. Her legal address is listed as our address. We paid 75% (or more) of their living expenses and she did not work at all. She did receive state assistance part of the year (less than $3,600), but again, we still paid the majority of their expenses. Can we claim my daughter and grandchild?

  17. My 77 year old father-in-law lived with my wife and I during 2010 and had approximately $5200 in gross retirement income. This was in addition to his Social Security Benefits. Can we claim him as a dependent?

  18. A qualifying relative cannot be the qualifying child of any taxpayer. The individual must have gross income less than the amount of the personal exemption. Id. The taxpayer must have provided over one-half of the individual’s support. The allowable relationships between the taxpayer and the qualifying relative are almost innumerable, but under no circumstances can the relationship be one that violates local law.

  19. My 85 year old mother lived with my husband and me the entire of 2009. Her only income is from Social Security and a nominal amount of interest from bank accounts. She pays use $300.00 per month room and board. Can I claim my mother as a dependent on my 2009 income tax return? Do I have to claim the $300 per month as income?

  20. Is the cost of starting up a new business, as an independant rep for a network marketing company deductable?? And what about any monthly costs or advertising costs? Please help! Thanks!

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