Exempt Income

The Exempt Income are.

items of income specifically excluded from taxation by the Internal Revenue Code, the U.S. Constitution, Congress, or foreign tax treaties. Examples include:

• death benefits up to $5,000.

• gifts and inheritances.

• interest on state and local bonds.

• compensation for injuries or sickness.

• accident and health plan benefits.

• employer contributions to accident and health plans.

• rental value of parsonages.

• combat zone pay.

• qualified scholarships.

• certain fringe benefits.

Exempt (from withholding) is:

Free from withholding of federal income tax. A person must meet certain income, tax liability, and dependency criteria. This does not exempt a person from other kinds of tax withholding, such as the Social Security tax.

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

See Inheritance Tax and Inheritance Tax.