Problem:

The issue here is that the user wanted to exclude the posts that are on the child term of the parent taxonomy being viewed.

Solution:

This can be done with the code below.

add_filter( 'parse_tax_query', 'exclude_child_term_posts' );
function exclude_child_term_posts( $query ) {
    if (!is_admin() && $query->is_main_query() && $query->is_tax( 'categories' )) {
        $query->tax_query->queries[0]['include_children'] = 0;
    }
}

This code can be added to Toolset -> Settings -> Custom Code and esnure that it is activated. Replace 'categories' with the slug of your taxonomy.