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tax deduction Finance Definition
An expense deducted against taxable income that reduces tax liability. Deducting expenses from income reduces taxable income, and thus decreases the amount of tax owed. Tax deductions allow the government to encourage certain behaviors.
tax deduction Law Definition

n

A reduction in gross income in order to reduce one’s income tax liability. It is worth a percentage of what a tax credit is worth. See deduction. See also tax credit.