What is the term for an amount that can be claimed for dependents in tax calculations?

The term for an amount that can be claimed for dependents in tax calculations is "exemption." An exemption reduces a taxpayer's taxable income based on the number of dependents they have, which could include children or other qualifying relatives. This reduction in income directly lowers the tax liability, as taxes are calculated on a lower taxable income.

Historically, exemptions were a key component of tax calculations, allowing taxpayers to account for dependents that contribute to their financial obligations. While the Tax Cuts and Jobs Act of 2017 suspended personal exemptions through 2025, understanding the concept and its role in tax calculations remains fundamental. The context of whether exemptions are currently in effect or not may indeed change over time, but the definition helps distinguish it from other terms.

In contrast, deductions reduce taxable income but are not specifically tied to the number of dependents. Tax credits provide a direct reduction of the tax owed, rather than reducing income, and deferrals delay taxation on income to a future date. Thus, exemption is the most accurate term for claiming a dependent in the context of tax calculations.