---
title: "Exclusion"
type: Legal Term
source: https://casebriefly.com/legal-terms/exclusion
---

# Exclusion

An exclusion is a statutory provision that removes a specific category of income from the definition of gross income, so the amount is never included in the tax base at all. Common exclusions include employer-provided health insurance (IRC Section 106), gifts and inheritances (Section 102), life insurance proceeds (Section 101), municipal bond interest (Section 103), and certain gain from the sale of a principal residence (Section 121). Exclusions are more valuable than deductions of equal dollar amounts because they prevent the income from being reported in the first place, avoiding any impact on AGI-dependent calculations. Like deductions, exclusions are a matter of legislative grace and must be specifically authorized by the Code.

## Related Terms

- gross-income
- deduction
- tax-exempt-organization
- gift-tax

## Related Cases

- commissioner-v-glenshaw-glass

## Example

When an employee receives $20,000 in employer-paid health insurance premiums, that amount is excluded from gross income under Section 106 and never appears on the employee's tax return.

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Source: [Exclusion — CaseBriefly](https://casebriefly.com/legal-terms/exclusion)