Can I buy with torn money?

I'm curious, can I still use torn money to make purchases? I've heard that damaged currency can be rejected by some retailers, but is there a specific policy or guideline that governs whether torn money is accepted as valid tender? Is there a threshold for how much damage a bill can have before it's considered unfit for circulation? And if a store does refuse to accept my torn money, what are my options for exchanging it for a new bill?