New Personal Exemption

personal exemption

The abolition of the personal is also a significant shift. This provision was a subtraction from income before the overhaul for each person included in a tax return-typically family members. The amount for 2018 was set to be $4,150 per person, and for higher earners it was phased out.

was also essential in determining the correct withholding of pay by an employee. The interaction between expanded standard deduction, abolished personal exemption and increased child credit is complex and the effects on individuals vary widely depending on their circumstances. This is partly because the personal exemption was a deduction from income, while the child credit is a tax offset for the dollar.

Many families with younger children will come forward under the new law in 2018, especially if they have in the past taken the standard deduction due to the increased child credit of up to $2,000 per child, which extends to far more households. But some will not, especially if their dependents are 17 years of age or older. Instead of the exemption, they will receive a $500 tax credit. Both the extended standard deduction and the abolition of the personal exemption expires at the end of 2025.