Personal Exemption

The dollar amount that each individual taxpayer is able to deduct for him or herself or a dependent each year. A separate personal exemption is accorded to every man, woman and child in the U.S. that must file a return. For example the amount of the personal exemption was $3,500 in 2008 and $3,650 for 2009.

The amount of each personal exemption that may be claimed is subject to an adjusted gross income phaseout. For example, in 2008, single filers could only claim the entire amount of the exemption if their incomes were less than $159,950, while head of household filers faced a limit of $199,950. Married taxpayers filing jointly could not make more than $239,950 to claim the full amount for personal exemptions, or $119,950 if they file separately. In 2009, the phaseouts begin at $250,200 for married couples filing jointly, $125,100 for married taxpayers filing separately, $166,800 for single taxpayers and $208,500 for heads of households.