Personal Exemptions

Individuals are entitled to claim a personal exemption for themselves and any dependents they support. The personal exemption acts just like a tax deduction: it reduces your taxable income, so you end up pay taxes on less income.

The personal exemption amount is indexed annually for inflation. For tax year 2008, the personal exemption amount is $3,500. For a personal exemption amounts in other tax years, see the table below.

2009: $3,650
2008: $3,500
2007: $3,400
2006: $3,300
2005: $3,200
2004: $3,100
2003: $3,050
2002: $3,000
2001: $2,900
2000: $2,800
1999: $2,750

If someone else can claim you as a dependent, then you cannot claim your own personal exemption. Also, taxpayers cannot claim as a dependent anyone who files a joint tax return with his or her spouse.

Spouses filing a joint return can claim two personal exemptions, one for each spouse, even if one spouse earns all the income. If one spouse is supported by someone else, then that other person can claim the dependent and the personal exemption only if the spouses file separate returns.

For example, John and Mary are married. Mary lived with her parents all year while John was serving in the military. Mary was a full-time student and did not have any income. Mary's parents can claim her as a dependent only if John and Mary file separate tax returns. If John and Mary filing a joint tax return, Mary's parents cannot claim her as a dependent.

Dollar Amount Reduced Based on Income

Personal exemptions are subject to phase-out limits. Taxpayers will lose some of their personal exemptions if adjusted gross income exceeds certain threshold amounts. However, taxpayers can lose at most two-thirds of their personal exemptions. You'll need to use a worksheet in IRS Publication 501 to calculate your personal exemption amount if your adjusted gross income is over the threshold amounts shown below.