Exemption
A deduction allowed by law to reduce the amount of income that would otherwise be taxed. An exemption is based on a status or circumstance rather than economic standing. Investopedia Says:
There are two types of exemptions: personal and dependency.
An example of an exemption is the reduction in taxes you are granted for the dependent children (under the age of 18) living with you. Related Terms:
Deduction
Dependent
Exempt Income
Tax Credit |