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Indexing of Tax Exemptions

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Each year the I.R.S. adjusts the value of an exemption based on inflation (and rounded to the nearest $50). In a recent year if the exemption was worth $3,100 and inflation was 4.7%, what would be the amount of the exemption for the upcoming tax year?

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Solution Summary

Citing authoritative references, this solution illustrates how to compute the personal or dependency exemption indexed for inflation.

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IRC section 151(d)(4)(a) states that "In the case of any taxable year beginning in a calendar year after 1989, [$2,000] shall be increased by an amount equal ...

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