Income exclusion rule

Income exclusion rule

The IRS rule that excludes certain types of income from taxation, e.g., welfare payments.

Income Exclusion Rule

An IRS rule stating that certain income is always tax-exempt. Examples of income falling under the income exclusion rule are welfare payments, child support, and coupons from municipal bonds.
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Benefits paid from a WBP trust are subject to the same income exclusion rules that apply to benefits paid directly by an employer.
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