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What is an Exemption?

Updated on August 18, 2010

An exemption, in law, is freedom from a general burden of levy or liability, particularly for debt or for taxes. Thus a person's specified personal belongings, such as wearing apparel, household furniture, or tools of his trade, may not be subject to levy for his debts, to satisfy a judgment against him, or for payment of taxes.

The U.S. federal income tax specifically exempts from tax a certain amount of the income of each individual. A familiar deduction is that for the head of a household. State laws vary, but many states of the United States grant tax exemption to certain types of property. It is often considered that the limitations placed on garnishment of the wages of a judgment debtor have in effect created a new type of exemption. The Consumer Protection Act, passed by Congress in 1969, restricts most wage garnishments to not more than 25% of earnings, and no employee may be discharged for any single garnishment.


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