Tax exemption refers to a financial privilege that allows certain individuals or organizations to avoid paying specific taxes. This can apply to various entities, such as nonprofit organizations, charities, and certain government entities, which may be exempt from income tax due to their purpose of serving the public good. Individuals may also qualify for tax exemptions based on specific criteria, such as dependents or disability status. These exemptions reduce the amount of taxable income, ultimately lowering the overall tax burden for those eligible. Tax exemptions are often established by law and can vary by jurisdiction.