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Exemption vs Deduction

Congress understood that a person needs a basic level of income in order to have food, clothing and shelter. However, that amount is minimal compared to a person's real world living expenses.

An exemption is that minimal amount.  For 2014 tax returns the amount is $3,950. If you have a spouse and dependents, go ahead and multiply that amount by the number of your dependents and your spouse.


What if a taxpayer has expenses above that amount?

You can deduct certain expenses if you have significant medical and dental costs above a specific amount, pay state income tax, own real estate, make charitable contributions or have un-reimbursed job expenses.

And if you don't have any of those expenses?

You can claim the standard deduction, and that amount depends on how you file your tax return. For 2014, the amounts are:


Single - no spouse or dependent(s):
Head of Household – dependent(s) with no spouse:
Married Filing Jointly:
Married Filing Separately:



Both exemptions and deductions can lower your taxable income, but exemptions are always a specific amount, while deductions can be a specific amount OR reflect specific expenses.