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tax exemption
(redirected from tax-exempt)

   Also found in: Dictionary/thesaurus, Wikipedia 0.06 sec.
tax exemption, immunity from the requirement of paying taxes. Federal, state, and usually local law provide exemption from taxation for a wide variety of organizations, usually not-for-profit, such as churches, colleges, universities, health care providers, various charities, civic leagues, labor unions, trade associations, social clubs, and political organizations. Such policies date back to 1894, when the U.S. Congress passed income tax laws that provided exemptions for certain institutions.


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These transactions were created to shift tax benefits to taxable entities and shift reportable income to tax-exempt entities.
The tax-exempt sector has faced increased scrutiny in recent years as it has grown in size and complexity.
Consider municipal bond funds, which hold tax-exempt bonds issued by state and local governments.
 
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