What are the federal income tax deductions for personal exemptions?
Effective 2018 through 2025, personal and dependent exemptions are suspended entirely. In prior years, each person could lower taxable income by around $4,000.
Pre-2018: In addition, a taxpayer is allowed an additional personal exemption for each dependent. A dependent is a person with certain specified relationships to the taxpayer and with more than half of whose support is provided by the taxpayer. Children cease to be dependents, even if supported by a parent or parents, in the year in which they attain age 19, or in the year in which they attain age 24 if they are full-time students for at least 5 months during the taxable year. The definitions of "support" and "full-time" result in many disputes and persons claiming these exemptions should consult with a tax adviser.
There are rules dealing with a dependent who is supported by several taxpayers. Essentially, any person paying at least 10% of the support can claim the exemption if all other 10% or more payers agree (and none of them paid more than 50% of the support) and have the appropriate relationship to the claimed dependent.
The personal exemptions are, like many other tax benefits, phased out for taxpayers with substantial taxable incomes. Phase-outs for personal exemption amounts (called "PEP") begin with adjusted gross incomes.