To whom does a tax exemption typically apply?

A tax exemption typically applies to taxpayers and their dependents because it is designed to reduce the amount of taxable income that an individual or household reports to the government. Tax exemptions are often provided to help alleviate the financial burden on taxpayers, allowing them to keep a larger portion of their earnings.

When an exemption is claimed, it reduces the taxpayer's taxable income, ultimately leading to a lower tax liability. Dependents—usually children or other relatives who meet specific criteria—qualify the taxpayer for additional exemptions, which further decrease taxable income. This system recognizes that taxpayers may have family responsibilities and financial obligations that warrant reduced tax payments.

The other options are more limited in scope and do not reflect the broader applicability of tax exemptions. For instance, exemptions are not exclusive to any age group, specific types of expenses, or just self-employed individuals. They extend to all eligible taxpayers and their approved dependents, making the option about taxpayers and their dependents the correct understanding of how tax exemptions function.