How much do I get to deduct for a dependent?

In 2008, the amount you can deduct (called an "exemption") for a dependent on your tax return is $3,500. This amount usually increases each year.

If you have two dependents, you can deduct $3,500 per dependent, for a total deduction of $7,000. If you have three dependents, the total deduction is $10,500, and so on.

There is a limit, though. If you're a high-income taxpayer, your deductions for exemptions may be phased out. This means that at a certain income, you can't take the full deduction of $3,500 per dependent in 2008. At even higher incomes, the deduction amount for your dependents is zero.