Dependency Exemption

A Dependency Exemption is a tax benefit that allows taxpayers to reduce their taxable income for each qualifying dependent, such as children or certain relatives. This exemption recognizes the financial support one provides to dependents, which can ease the tax burden. While the specific exemption was eliminated with the changes in tax law in 2018, understanding it is important, as it was a tool for families to claim deductions for the people they financially support. Taxpayers often look for similar credits or deductions today, such as the Child Tax Credit, which provides similar financial relief.