What are the federal income tax deductions for personal exemptions?
Each person is allowed a deduction for personal exemption. This amount is $4,050 for 2017, the same as 2016. Effective 2018 through 2025, personal and dependent exemptions are completely eliminated.
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.
For 2017, single individuals having $261,500 in AGI are completely phased out at $384,000. Married, filing jointly, and surviving spouses having $313,800 AGI are completely phased out at $436,300. Married filing separately having $156,900 AGI are phased out at $218.150.
For 2018-2025, the personal exemption is eliminated.