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Personal Exemptions

Personal exemptions reduce taxable income

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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 paying taxes on less income.

The personal exemption amount is indexed annually for inflation. For tax year 2013, the personal exemption amount is $3,900. For a personal exemption amounts in other tax years, see the table below.

  • 2014: $3,950
  • 2013: $3,900
  • 2012: $3,800
  • 2011: $3,700
  • 2010: $3,650
  • 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.

Spouses filing a joint return can claim two personal exemptions, one for each spouse, even if one spouse earns all the income.

Personal Exemption Amount Reduced Based on Income

Personal exemptions are subject to phase-out limits, called the personal exemption phaseout (or PEP). The phase-out limits did not apply for the years 2010, 2011 or 2012. The limitations on personal exemptions will take effect again in 2013 and future years.

The personal exemption phases out, or gradually reduces, by 2 percent for each $2,500 (or fractional portion of $2,500) by which a person's adjusted gross income for the year exceeds a threshold amount. For people who use the married filing separately status, the personal exemption phases out by 2 percent for each $1,250 that adjusted gross income threshold. (Source: Internal Revenue Code section 151.)

Phaseout Range for Personal Exemptions for 2014
Filing Status Phaseout Begins Phaseout Ends
Married Filing Jointly 305,050 427,550
Qualifying Widow(er) 305,050 427.550
Head of Household 279,650 402,150
Single 254,200 376,700
Married Filing Separately 152,525 213,775


(Source: Revenue Procedure 2013-35)

Phaseout Range for Personal Exemptions for 2013

Filing Status Phaseout Begins Phaseout Ends
Married Filing Jointly 300,000 422,500
Qualifying Widow(er) 300,000 422,500
Head of Household 275,000 397,500
Single 250,000 372,500
Married Filing Separately 150,000 211,250


(Source: Revenue Procedure 2013-15)

For example: Darla has adjusted gross income of $300,000 in 2013 and she files as head of household and claims two personal exemptions: one for herself plus one for her daughter. The relevant threshold for 2013 is $275,000 for head of household filers. Darla's adjusted gross income of $300,000 exceeds the threshold of $275,000 by $25,000. We take this excess amount and divide by $2,500, which is 10. We multiply this by 2%, to get 20%. Darla reduces her personal exemptions by 20%. For 2013, Darla's personal exemptions are reduced by (3900 + 3900) x 20%, or $1,560. So Darla's two personal exemptions (which total $7,800 before the reduction) are worth only $6,240 (after reducing $7,800 by $1,560).

The reduction in personal exemptions can be calculated using Worksheet 2-6 in Publication 505.

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