tax deduction

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Tax deduction

An expense that a taxpayer is allowed to deduct from taxable income.


An amount of money that one may subtract from one's gross annual income when calculating one's income tax liability. A common misconception about tax deductions is that they represent a dollar-for-dollar reduction of one's tax liability. Rather, a deduction removes a certain dollar amount from the income the IRS uses to calculate the percentage of one's income that is owed in taxes. Common deductions are charitable contributions, business expenses, and interest on mortgages. See also: Tax credit.

tax deduction

See deduction.

tax deduction

An expense allowed as a reduction of taxable income.The most common individual deductions are for home mortgage interest,ad valorem and sales taxes,moving expenses associated with a job, charitable giving, and health-care costs. Virtually all expenses associated with income-producing property are deductible, including noncash expenses such as depreciation. Virtually all operating expenses for a business are deductible, except that capital expenditures (a new roof, expansion of building, purchase of equipment) must be capitalized and depreciated over time unless falling within the Section 179 limits. Section 179 lets a taxpayer deduct as expenses certain things that would otherwise have to be capitalized.

References in periodicals archive ?
The development of epFace further ensures we are providing the most accurate and specific calculations possible in identifying and optimizing tax deductions for our clients.
As my previous article about the Energy Policy Act in the January 26th issue stated, a 179D tax deduction is available for a qualifying energy efficient commercial building beginning in the year the building was placed in service.
1992b, Income Tax Deductions for Losses as Insurance, American Economic Review, 82: 1013-1017.
However, the absolute book expense and tax deduction are not separately identified but subsumed in the various expense accounts used.
Four years later, the Bush administration has offered a more targeted policy in which taxpayers would receive a tax deduction for their long term care insurance premiums.
The current value of a tax deduction for a premium payment, as opposed to a similar deduction for losses paid in future years, adds value to the economics of a self-insurance transaction.
Minnesota: Republicans in the legislature are expected to push for converting the state's tuition tax deduction program, which benefits primarily private school patrons, into tuition tax credits, a more direct form of aid.
The self-employed and their families can benefit from the establishment of higher tax deductions on health insurance costs.
A large portion of the donated gift gives an immediate tax deduction, and a percentage of the income you receive is tax-free.
Generally, a supporting organization is partnered with a charitable trust that provides a vehicle to shelter the donor's assets, generate income, and earn tax deductions.
As a landlord, you'll be able to take certain tax deductions.
They also are more than outweighed by the value of current tax deductions for the company's contributions to the secular trust and the concomitant shift of current taxation to the executive.