{"id":56568,"date":"2021-03-24T10:32:08","date_gmt":"2021-03-24T15:32:08","guid":{"rendered":"https:\/\/resource-center.hrblock.com\/?p=56568"},"modified":"2025-03-24T14:56:43","modified_gmt":"2025-03-24T19:56:43","slug":"what-is-an-exemption","status":"publish","type":"post","link":"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/filing\/what-is-an-exemption\/","title":{"rendered":"What is an exemption?"},"content":{"rendered":"\n<p>The term \u201cexemptions\u201d can apply to many facets of taxes. There are home, healthcare, and real estate exemptions, to name a few applications of this term.<\/p>\n\n\n\n<p>In this post, we\u2019ll outline what is a tax exemption, and how to apply the knowledge of this definition to your specific tax situation.<\/p>\n\n\n\n<p>Read on to better understand what a tax exemption is, what is tax exempt, and other state tax exemptions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-a-tax-exemption\">What is a tax exemption?<\/h2>\n\n\n\n<p>Wondering the answer to \u201cWhat is a tax exemption?\u201d An exemption is a tax\u00a0deduction that lowers the amount of income that would otherwise be taxed. Prior to the <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/tax-reform\/tax-cuts-and-jobs-act\">Tax Cuts and Jobs Act<\/a>, the IRS offered two tax exemptions:<\/p>\n\n\n\n<p><strong>1 \u2013 Personal exemptions:<\/strong> The amount a taxpayer is entitled to claim as a\u00a0tax\u00a0deduction against\u00a0personal\u00a0income. Personal exemptions were an input to calculate the amount owed in <a href=\"https:\/\/www.hrblock.com\/tax-center\/income\/other-income\/income-tax\/\">federal income taxes<\/a>. All taxpayers could claim a personal exemption. For married taxpayers filing separate returns, an exemption could only be claimed for a spouse if that spouse:<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"240\" height=\"160\" src=\"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/wp-content\/uploads\/2021\/03\/Tax-exemptions.jpg\" alt=\"\" class=\"wp-image-56572\"\/><\/figure><\/div>\n\n\n<ul class=\"wp-block-list\">\n<li>Had no gross income<\/li>\n\n\n\n<li>Wasn\u2019t filing a tax return<\/li>\n\n\n\n<li>Wasn\u2019t the dependent of another taxpayer<\/li>\n<\/ul>\n\n\n\n<p><strong>2 \u2013 Dependent exemptions:<\/strong> Taxpayers could also claim a tax exemption for dependents pre-tax reform. A dependent qualified as either a child or a relative who met a series of tests. (See IRS&nbsp;<a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-501\">Publication 501<\/a>, Exemptions, Standard Deduction and Filing Information for more information.)<\/p>\n\n\n\n<p>Tax reform brought changes and you now can\u2019t take tax exemptions. These changes are enforced until 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-tax-exemption-vs-standard-deduction-trade-off-post-tax-reform\">Tax exemption vs. standard deduction trade-off post tax reform<\/h2>\n\n\n\n<p>While personal and dependent tax exemptions went away with tax reform, the <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/adjustments-and-deductions\/standard-vs-itemized-deductions\/\">standard deduction<\/a> amount when filing federal taxes nearly doubled. For couples, the amount went from $12,700 to $24,000. For an individual taxpayer, the amount went from $6,350 to $12,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-other-tax-exemption-definition\">Other tax exemption definition<\/h2>\n\n\n\n<p>The term \u201ctax exemptions\u201d has multiple meanings. In fact, there are a few more exemption definition that applies to taxes as well:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-employee-withholding-exemptions\">1 \u2013 Employee withholding exemptions<\/h3>\n\n\n\n<p>All employers of W-2 employees withhold income tax from their employees\u2019 pay. This payment is remitted through their paychecks to the IRS. If an employee has zero&nbsp;tax liability, they can request an exemption from&nbsp;withholding. This means their employer doesn&#8217;t take out any federal income tax withholdings from their paycheck and would withhold only Social Security and Medicare contributions. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-tax-exemption-form-for-employee-exemptions\">Tax exemption form for employee exemptions<\/h4>\n\n\n\n<p>If an employee is tax exempt and has no withholdings, what tax exemption form would they use? The answer: <a href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/forms\/what-is-a-w-4-form\/\">Form W-4<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-state-tax-exemptions\">2 &#8211; State tax exemptions<\/h3>\n\n\n\n<p>City, county, and state governments offer tax exemptions to businesses to fuel the local economy. There are multiple state tax exemptions for paying property taxes, for example, if the business meets certain conditions. Some states also have lowered tax rates for certain types of industries. To find if your state tax exempt laws, visit your area\u2019s department of revenue\/taxation\u2019s website. You can also view more information about <a href=\"https:\/\/www.hrblock.com\/tax-center\/filing\/personal-tax-planning\/do-i-have-to-file-state-taxes\/\">state taxes<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-tax-exemptions-for-non-profit-organizations\">3- Tax exemptions for non-profit organizations<\/h3>\n\n\n\n<p>To make matters more complicated, many non-profit organizations are exempt from some taxes.<\/p>\n\n\n\n<p>Generally, any organization that doesn\u2019t operate for profit and offers valuable community services can qualify for non-profit tax exemptions. In fact, they are exempt from most federal income tax and some state tax (property or sales). Additionally, some charitable contributors can take tax deductions for donations to qualifying non-profit organizations.&nbsp;<\/p>\n\n\n\n<p>Tax designations for non-profits are 501(c)(1-28). The most common is 501(c)(3).<\/p>\n\n\n\n<p>Qualified non-profits have a tax exemption number. You can apply for one or search for one on <a href=\"https:\/\/www.irs.gov\/charities-non-profits\/tax-exempt-organization-search\">IRS.gov<\/a>. In the search tab, you can look up organizations by name, state, or zip code.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-so-what-is-tax-exempt\">So, what is tax exempt?<\/h2>\n\n\n\n<p>In this resource, you\u2019ve learned individual taxpayers, employees, businesses, and other non-profit entities can be tax exempt.<\/p>\n\n\n\n<p>Frankly, there are a lot of rules when it comes to taxes, so let H&amp;R Block guide you. With many <a href=\"https:\/\/www.hrblock.com\/filing-options-and-products\/\">ways to file<\/a>, we can work with your unique tax situation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The term \u201cexemptions\u201d can apply to many facets of taxes. There are home, healthcare, and real estate exemptions, to name a few applications of this term. In this post, we\u2019ll outline what is a tax exemption, and how to apply the knowledge of this definition to your specific tax situation. Read on to better understand [&hellip;]<\/p>\n","protected":false},"author":406,"featured_media":56569,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[35,125],"tags":[],"class_list":["post-56568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-adjustments-and-deductions","category-filing"],"acf":[],"yoast_head":"<title>Tax Exemptions | H&amp;R Block<\/title>\n<meta name=\"description\" content=\"Learn the definition of a tax exemption and how it may apply to your specific tax situation, with help from the tax pros at H&amp;R Block.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hrbcomlnp.hrblock.com\/tax-center\/filing\/what-is-an-exemption\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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