Tax-Exempt Income

Tax-exempt income is earnings that the government does not require you to pay taxes on. This means you keep the full amount without deductions. Common examples include certain types of interest from municipal bonds, some social security benefits, and specific retirement income, among others. The purpose of tax exemption is often to encourage specific activities, support social goals, or provide relief to particular groups. While it isn’t taxed, tax-exempt income still may impact other tax calculations, such as determining eligibility for certain credits or benefits. Always check specific rules to understand what qualifies as tax-exempt.