Other forms: exempted, exempting, exempts
Exempt means freed from a duty that everybody else has to meet. The rule exists and it does not apply to you.
It takes from. Tax is where the word does most of its work, so tax-exempt income and exempt goods are formal categories, and exempt from VAT is a real distinction from zero-rated. It also covers military service, jury duty and school rules. It works as a verb too, so exempting somebody from a requirement is granting the exemption. The noun is exemption, and it is what you apply for.
Proto-Indo-European
*h₁em-
Latin
exemptus
Middle French
exempt
English, today
exempt
From Middle French exempt, from Latin exemptus, past participle of eximō.
Etymology from Wiktionary, CC BY-SA