Deduction

What Does Deduction Mean?
Any item or expenditure subtracted from gross income to reduce the amount of income subject to tax.

Also referred to as "allowable deduction".

Investopedia explains Deduction
For example, if you make $40,000 and you have a deduction for $1,000, then your taxable income is reduced to $39,000.

Filed Under: Personal Finance, Taxes

Related Terms

1040 Form
Audit
Charitable Donation
Home Office Expense
Income Tax
Internal Revenue Service - IRS
Non-Refundable Tax Credit
Student Loan Interest Deduction
Tax Return
Write-Off
More Related Terms

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How can I make sure I get all my eligible deductions?
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Which is better for tax deductions, itemization or a standard deduction?

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