taxes
tax deduction
An expense that can be subtracted from taxable income, reducing the amount of tax owed.
Example
"Her mortgage interest was a tax deduction that reduced her taxable income by $12,000."
💡 Memory Tip
DEDUCT = subtract. A tax deduction SUBTRACTS from your taxable income.
Etymology
Tax (government levy) + deduction (subtraction) — amounts subtracted from your taxable income.
Common Misspellings
tax deducktiontax deductointax deducitontaxdeduction
Related Terms
See Also
taxable incomeitemized deductionsstandard deduction