{"id":353965,"date":"2016-04-04T10:48:03","date_gmt":"2016-04-04T15:48:03","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/tax\/federal-taxes\/tax-exemptions.html"},"modified":"2025-02-20T16:01:52","modified_gmt":"2025-02-20T21:01:52","slug":"tax-exemptions","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/tax\/federal-taxes\/tax-exemptions.html","title":{"rendered":"Tax Exemptions"},"content":{"rendered":"\n
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Who Qualifies for Tax Exemptions?<\/h1>\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

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Tax exemptions reduce taxable income, but the 2017 Tax Cuts and Jobs Act eliminated many personal and dependent exemptions, replacing them with an increased standard deduction and child tax credit. While individual filers have fewer exemptions, nonprofit organizations and businesses often remain exempt from federal income tax. These entities can receive tax-deductible donations. State and local governments may also offer exemptions to stimulate economic growth. <\/p>\n\n <\/div>\n\n

The U.S. tax code<\/a> provides tax exemptions that allow taxpayers to reduce their taxable income and, thereby, pay less in taxes. Over the years, the IRS has eliminated certain exemptions and added others.<\/p>\r\n

For example, the 2017 Tax Cuts and Jobs Act (TCJA) eliminated most personal and dependent exemptions starting in 2018. In its place, the TCJA created the standard deduction<\/a> for individual taxpayers to replace the eliminated exemptions. In addition, the act provided for a higher child tax credit to replace the eliminated dependent exemptions.<\/p>\r\n

While most individual tax filers are no longer eligible for exemptions, nonprofit organizations and businesses are still generally exempt from the federal income tax<\/a>. Donations to these exempt organizations are usually tax deductible for the tax year in which the taxpayer made the charitable contribution.<\/p>\r\n

Many state and local governments also offer tax exemptions<\/a> to nonprofits and businesses in specific fields to stimulate their economies.<\/p>\r\n

Here, we’ll discuss federal tax exemptions and how they may impact your tax return<\/a>. Consider the FindLaw articles in our \u201cHelpful Links" section, or consult a tax professional for more information.<\/p>\r\n

Tax Exemptions vs. Tax Deductions and Credits<\/h2>\r\n

Unless you’re a tax law attorney or accountant, you may not know the differences between tax deductions<\/a> and tax exemptions. Or confuse tax exemptions with tax credits. It’s crucial to understand how these things work if you want to maximize your tax refund.<\/p>\r\n

When you file your federal income tax return, you must account for your taxable income<\/a>. This is how the IRS determines how much tax you owe. Of course, few people (if any) pay taxes on their total gross income. Before calculating your tax liability, you’ll want to take advantage of every opportunity to reduce your taxable income.<\/p>\r\n

The best way to reduce your taxable income is to claim every tax deduction, exemption, and credit available. Since tax rates go down with income levels, you can actually change your tax bracket<\/a>, which can save you thousands of dollars.<\/p>\r\n

Tax Deductions<\/h3>\r\n

Tax deductions are precisely what they sound like \u2014 money you deduct from your total gross income<\/a>. There are all sorts of tax deductions. Some of the more common ones include:<\/p>\r\n