tax deduction


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia, Wikipedia.

Tax deduction

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

Deduction

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 ?
Many New Yorkers prepaid their 2018 state and local property taxes with the belief that they could retain the ability to deduct these property taxes from their federal taxes before the new cap imposed on state and local tax deductions.
If all the allowable sales tax deduction amount exceeds the income tax deduction amount, deduct the sales tax rather than the income tax.
Medical expenses for treating certain illnesses are eligible for a tax deduction up to ` 40,000, or ` 60,000 for senior citizens.
The limit of tax deduction is Rs 1 lakh per year if the dependant suffers from severe disability ('80% or more') or Rs 50,000 otherwise.
To promote SME employment, the government will continue to provide tax deductions for social security insurance costs, introduce a tax deduction of 1 million won per part-time employee that has been hired as a full-time employee, and expand the job sharing tax credit* to all SMEs.
Roughly 7 in 10 oppose eliminating the charity deduction, compared with about 6 in 10 who oppose getting rid of the mortgage interest and state and local tax deductions.
We first study whether a tax deduction for net losses is optimal, where the private insurance market is that characterized by Raviv (1979) in which the optimal private insurance is endogenously determined to be a policy limit contract due to price regulation.
According to preliminary calculations this will lead to a tax deduction of approximately SEK325m for Hakon Invest.
They maintain that the credit will be worth more, equivalent to a $12,000 tax deduction for most middle-class families.
Prior to January 1, 2006 people who purchased hybrids were allowed to take a $2000 income tax deduction, after that date, the deduction became even larger.
For example, if a business buys a $1 million machine that lasts for ten years, it garners a $100,000 tax deduction each year for ten years.