What is a Personal Deduction?
A personal deduction is an amount that reduces your taxable income for the year and is based on a combination of factors. The personal deduction is often called the personal exemption amount on the individual income tax forms. Taxable income is the amount that is used to calculate the tax bracket that you fall into and the taxation rate that you need to pay. There are three types of personal deduction amounts available: individual, spousal and dependant. Every person who is filing a tax return is eligible to claim the individual deduction amount. It is not related to your level of income and is a federal amount. The amounts are reviewed annually and are often updated to reflect increased cost of living.
