Taxes File Your Own Taxes Personal Exemption Rules 2023 Personal exemptions are no longer deductible By William Perez Updated on January 18, 2023 Reviewed by Ebony J. Howard Reviewed by Ebony J. Howard Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries. learn about our financial review board Fact checked by Yasmin Ghahremani In This Article View All In This Article The Exemption Was Removed in 2018 Who Was Eligible? How Much Was It Worth? Reductions Based on Income No Effect on Alternative Minimum Tax TCJA Standard Deductions Photo: © Mike Kemp / Getty Images Key Takeaways Personal exemptions are not allowed as a tax deduction.They did exist before the 2017 Tax Cuts and Jobs Act and are set to reemerge in 2025, but Congress could renew the 2017 law.A taxpayer was allowed to claim one personal exemption for themselves and one exemption for each person they could claim as a dependent.A much larger standard deduction took the place of personal exemptions, along with a bigger child tax credit. Personal exemptions are no longer allowed as a deduction to reduce your taxable income. They did exist prior to 2017's Tax Cuts and Jobs Act (TCJA), but the TCJA suspended this tax benefit—at least for the time being. Learn more about how the personal exemption used to work, how the TCJA changed the situation, and what similar tax breaks still exist. The Personal Exemption Was Removed in 2018 The deduction for personal exemption was suspended from the tax code when the TCJA went into effect in 2018. As with many aspects of the TCJA that affected personal taxes, however, this change is scheduled to revert to pre-TCJA status after the 2025 tax year unless Congress takes steps to renew the legislation. Note The personal exemption might not return after the 2025 tax year. Congress has the option of renewing that and other temporary aspects of the tax law. Generally, you have three years from the original date of filing to amend a previous year's tax return. That means time has run out if you are seeking to amend a return for tax year 2017 or earlier. Who Was Eligible? All tax breaks come with a list of rules for claiming them, and personal exemptions were no exception. A taxpayer was permitted to claim one personal exemption for themselves and one exemption for each person they could claim as a dependent. Married people who filed jointly could claim two personal exemptions, one for each spouse, plus exemptions for each of their dependents. If they filed separately, however, one spouse could claim the other spouse's personal exemption only if the other spouse met certain requirements, such as earning no gross income throughout the year. You could not claim a personal exemption for yourself if you were someone else's dependent because that taxpayer was already claiming your personal exemption. Even if you weren't claimed as a dependent—but you or your spouse could've been claimed as a dependent by someone—you did not qualify to claim a personal exemption for yourself or your spouse. How Much Was the Personal Exemption Worth? Like many aspects of taxes, the personal exemption amount was indexed for inflation; it increased slightly most years to keep pace with the economy. But if the economy remained relatively steady and inflation was low, the personal exemption amount stayed the same. This happened in tax years 2016 and 2017 when it remained steady at $4,050 two years in a row. Here's how the exemption worked out in previous years: Historical Personal Exemption Amounts Year Amount 2017 $4,050 2016 $4,050 2015 $4,000 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 The Personal Exemption Amount Was Reduced Based on Income Unlike standard deductions, which apply equally to all taxpayers, deductions for personal exemptions were subject to phaseout limits called the "personal exemption phaseout" (PEP). Phasing out means that the exemption gradually reduces as a taxpayer's income increases. Every $2,500 a taxpayer earned above a set threshold reduced their personal exemption by 2%. The reduction could be applied fractionally to amounts that exceeded the threshold by less than $2,500. The personal exemption phased out by 2% for each $1,250 of adjusted gross income over the threshold for people who used the married-filing-separately status. Phaseout Range for Personal Exemptions for 2017 Filing Status Phaseout Begins Phaseout Ends Married filing jointly $313,800 $436,300 Qualifying widow(er) 313,800 436,300 Head of household 287,650 410,150 Single 261,500 384,000 Married filing separately 156,900 218,150 Here's an example of how this works. Suppose Darla had an adjusted gross income of $300,150 in 2017. She filed as head of household and claimed two personal exemptions: one for herself and one for her child. The relevant threshold for 2017 was $287,650 for head of household filers. Darla's adjusted gross income of $300,000 exceeded this threshold by $12,500. Take this excess amount and divide it by $2,500, which comes out to 5. Her personal exemptions must be reduced by 2% for each $2,500, which works out to five reductions of 2%, for a total of 10%. Darla's two personal exemptions totaled $8,100 before the reduction. Multiply that by 10% to get the reduction amount: $810. Therefore, the $8,100 exemption becomes a $7,290 exemption ($8,100 minus $810). Note The phaseout limits did not apply in 2010, 2011, and 2012. Exemptions Didn't Affect the Alternative Minimum Tax Personal exemptions could only reduce federal income tax. They didn't reduce the alternative minimum tax, sometimes called the AMT. Taxable income for AMT purposes was calculated without regard to personal exemptions. TCJA Standard Deductions With the suspension of personal exemptions, it might seem like the average family would start handing over a lot more in tax dollars beginning in 2018. However, the TCJA nearly doubled the standard deduction, and it increased the child tax credit to $2,000 (although the child tax credit has a phaseout income threshold). The American Rescue Plan Act, signed into law by President Biden in March 2021, increased the child tax credit to $3,600 for children under the age of 6, and to $3,000 for children age 6 through 17, for tax year 2021. Note The child tax credit reverts to its $2,000 level for the 2022 and 2023 tax years. Frequently Asked Questions (FAQs) How can I reduce my taxable income? Even though personal exemptions no longer exist under the TCJA, there are still numerous ways to lower your taxable income. For many taxpayers, the increased standard deduction will provide a significant reduction in taxable income. If you have enough deductions to itemize more than the standard deduction, you can also lower your income in that way. Even if you choose the standard deduction, you may also be able to deduct contributions to a traditional IRA, contributions to a health savings account, a portion of self-employment tax, and more. What are tax exemptions? "Tax exemptions" is a broad term for various types of income tax exclusions that individuals and businesses can claim for a portion or all of their income. These exemptions lower your taxable income, thus reducing your tax liability. They differ from tax credits, which directly reduce the amount of taxes you owe. What tax exemptions can I still claim? The 2017 TCJA eliminated personal exemptions for tax years after 2018, but you can still claim a variety of deductions and other tax exclusions, including a higher standard deduction, various above-the-line deductions, and a child tax credit. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. IRS. "Be Tax Ready – Understanding Tax Reform Changes Affecting Individuals and Families." Tax Foundation. "Tax Reform Isn't Done." IRS. "Topic No. 308 Amended Returns." Tax Policy Center. "What Are Personal Exemptions?" IRS. "Five Things To Remember About Exemptions and Dependents for Tax Year 2017." Tax Policy Center. "Historical Individual Income Tax Parameters." Cornell Law School, Legal Information Institute. "26 U.S. Code § 151.Allowance of Deductions for Personal Exemptions." TurboTax. "Summary of Federal Tax Law Changes for 2010-2017." Cornell Law School, Legal Information Institute. "26 U.S. Code§ 56, Adjustments in Computing Alternative Minimum Taxable Income." Congress.gov. “H.R. 1319—American Rescue Plan Act of 2021.” Pages 141-142. Related Articles How Did the Tax Cuts and Job Act Affect Single Parents? The Tax Cuts and Jobs Act: What Did It Mean for You? What Is a Phaseout in Taxes? 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