Personal Exemption

The personal exemption for 2010 is $3,650 and for 2011 the personal exemption is 3,700. Each individual is allowed to claim one personal exemption for yourself and one for each dependent. If someone else is entitled to claim you as a dependent such as your parents, then you cannot also claim your own exemption.

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Your personal exemption is a tax deduction which reduces your taxable income and therefore reduces your income tax liability. Personal exemptions are subject to phaseout rules in some years and the exemption is reduced depending upon your income level.  The personal exemption is indexed to inflation and usually changes each tax year.