Which Types of Income Are Exempt from Federal Taxes?

Some of the money you get yearly is not taxable under federal income tax. The IRS omits several forms of income from taxes, which might assist lower your total tax due. Common non-taxable income sources are listed below:

Money or property acquired as a gift or inheritance is not deemed taxable income. Gifted property, on the other hand, is taxable if it produces income—such as interest or rent.

Generally speaking, amounts received under a life insurance policy because of someone’s death are not taxable.

Payments made for child support are not taxable income and so do not have to be declared.

Welfare Benefits: Housing subsidies or food stamps are public help not taxed.

Benefits under workers’ compensation regulations for job-related injuries or diseases are tax-free.

Some Social Security Benefits: It could not be taxable if Social Security is your entire income. But, if you have more money, some of it could turn taxed.

Interest from municipal bonds usually escapes federal income tax and sometimes state tax as well.

Usually not taxable are educational scholarships and grants utilized for eligible costs like tuition and necessary fees.

Employer Health Plan Reimbursements: Usually, amounts your employer reimburses you for eligible medical costs are not taxed.

Though some might be taxed at the state level or need particular paperwork, these kinds of income might not be taxed nationally.

This entry was posted on Sunday, April 6th, 2025 at 3:33 pm and is filed under Deductions, Income, Tax Related Questions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.