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tax avoidance Finance Definition

Legally lessening the amount of taxes that a person pays. Tax avoidance strategies include making charitable deductions, investing in tax-exempt municipal bonds, and making a variety of retirement-related investments such as contributions to Individual Retirement Accounts (within income limits), salary reduction plans, or 401(k) plans. Using illegal methods to avoid paying taxes is called tax evasion.

tax avoidance Law Definition

n

The act of taking advantage of legal tax-planning opportunities and shelters in order to minimize one’s income tax liability. See also tax evasion, which is not legal.