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Are Some People Really Exempt From Paying Taxes?

By: Jodie Schneider & Melanie Radzicki McManus  | 

Who Is Exempt From Paying Income Taxes?

Certain groups of people who meet specific criteria don't have to pay income taxes. For example, for the 2020 tax year (2021), if you're single, under the age of 65, and your yearly income is less than $12,400, you're exempt from paying taxes. Ditto if you're married and filing jointly, with both spouses under 65, and income less than $24,800. Heads of Households earning less than $18,650 (if under 65) and less than $20,300 (if 65 or older) are also exempt. If you're over the age of 65, single and have a gross income of $14,050 or less, you don't have to pay taxes. Or if you're married and filing jointly, and you and your spouse are over 65, you can earn up to $27,400 before paying taxes [source: IRS].

A qualifying widow or widower over the age of 65 making less than $26,100 doesn't have to pay either. The IRS also exempts self-employed people who earn less than $400 [source: IRS].

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Dependents and some disabled persons are also exempt. These include the legally blind, those depending on another for income, individuals dependant on welfare and Social Security, people with permanent disabilities and war veterans on disability.

The tax code is not only used as the basis for collecting revenue, but also to encourage and reward certain activities. Taxpayers who would normally pay taxes can limit or eliminate their liability by taking advantage of available tax credits, such as child-care credits, saver's credit and education credits like the American Opportunity and Lifetime Learning credits, which can be claimed for tuition, course materials and certain fees.