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For 2008, the personal exemption per family member rises to $3,500 from $3,400 in 2007.
In 2009, the personal exemption will go up to $3,650.
You can claim the full amount of the personal exemption for a family member even if he or she is born on Dec. 31.
The personal exemption has been part of the Internal Revenue Code since it was established in 1913.
It exists because Congress believed that some level of income should never be subject to federal income taxes.
The 2008 exemption amount is nearly 80% higher than the amount you could claim in 1988.
But one of the peculiarities of existing tax law is that your personal-exemption deduction is gradually reduced as your income reaches higher adjusted-gross-income levels.
The exemption amount for taxpayers with adjusted gross income that exceeds the maximum phase-out amount is $2,333 for 2008.
In 2009, that exemption rises to $2,433.
These are the adjusted gross income levels for those phase-outs in 2008 and 2009:
| Filing status | Phase-out starts | Phase-out ends |
|---|---|---|
| Joint return | $239,950 | $362,450 |
| Head of household | $199,950 | $322,450 |
| Single | $159,950 | $282,450 |
| Married couples filing separately | $119,975 | $181,225 |
Here's how the exemptions phase out in 2008:
| Filing status | Phase-out starts | Phase-out ends |
|---|---|---|
| Joint return | $250,000 | $372,700 |
| Head of household | $208,500 | $331,000 |
| Single | $166,800 | $289,300 |
| Married couples filing separately | $125,000 | $186,350 |
For more information on standard deductions, check IRS Publication 17: Your Federal Income Tax (.pdf file) and Publication 501: Exemptions, Standard Deduction and Filing Information (.pdf file).
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