what is exempt income 
exempt income refers to certain types of income not subject to income tax some types of income are exempt from federal or state income tax or both the irs determines which types of income are exempt from federal income tax and the circumstances for each exemption states have their own rules that define what counts as exempt income understanding exempt incomesome income and benefits are nontaxable under certain circumstances several health related benefits are tax exempt including benefits from employer sponsored supplemental disability insurance purchased with after tax dollars private insurance plans funded with after tax dollars most benefits from employer sponsored health insurance plans and worker s compensation 3gifts that exceed a certain value can trigger a gift tax on the person providing the gift however any gift worth less than 17 000 in 2023 and 18 000 in 2024 is exempt from income tax 4 regardless of value gifts including medical expenses paid for someone else and charitable donations are income tax exempt charitable contributions are also tax deductible 5the tax cuts and jobs act tcja in 2017 eliminated personal exemptions from tax years 2018 to 2026 but roughly doubled the standard deduction 6 for tax years 2023 and 2024 the standard deductions are 74