Tax Exemption

Tax exemption refers to a monetary exemption that reduces Taxable Income. This means that certain individuals, organizations, or transactions are not subject to tax Liability, either partially or fully. Tax exemptions are often granted for specific purposes, such as promoting charitable activities, encouraging investment, or supporting certain sectors of the economy.

Examples:

• Charitable Organizations: Non-profit entities, such as charities and religious institutions, may be exempt from federal and state income taxes.
• Property Tax Exemptions: Some homeowners may qualify for exemptions based on age, disability, or veteran status, resulting in lower Property Taxes.
• Sales Tax Exemptions: Certain goods, such as food and prescription drugs, may be exempt from sales tax in some jurisdictions.

Cases:

• Walz v. Tax Commission of the City of New York (1970): The U.S. Supreme Court upheld the constitutionality of property tax exemptions for religious organizations.
• United States v. McIntosh (2016): This case addressed tax exemptions for tribal governments and their income-generating activities.