Federal Tax Exemption

A federal tax exemption reduces the amount of income that is subject to tax. It allows individuals or organizations to exclude certain amounts from their taxable income, which can lower their overall tax liability. Common examples include personal exemptions for dependents and exemptions for certain non-profit organizations. By granting these exemptions, the government aims to relieve financial burdens, encourage specific behaviors (like charitable giving), or support certain groups, such as low-income families. Essentially, it enables eligible taxpayers to keep more of their income by reducing what they owe in taxes.