The dependent exemption was a tax benefit that allowed taxpayers to reduce their taxable income for each qualifying dependent, such as a child or elderly family member. The exemption helped lower a taxpayer’s overall tax liability by subtracting a set amount from their gross income for every dependent claimed.
A dependent typically qualified if they:
- Were a child under the age of 19 (or under 24 if a full-time student) and lived with the taxpayer for more than half the year.
- Had gross income below a certain threshold and did not provide more than half of their own financial support.
- Were permanently and totally disabled, regardless of age.
The dependent exemption was suspended by the Tax Cuts and Jobs Act (TCJA) starting with the 2018 tax year, meaning taxpayers can no longer claim this exemption through at least 2025. However, the suspension of the dependent exemption coincided with an increase in the standard deduction and expanded child tax credits, which aimed to provide similar or greater tax relief to families.
While the dependent exemption is not currently available, it may return in future tax legislation, and taxpayers should stay informed about potential changes that could affect their eligibility for this or similar tax benefits.