DEFINITION of 'Domestic Production Activities Deduction'

A deduction against income derived from domestic manufacturing activities. The domestic production activities deduction is designed to encourage domestic production and production-related activities.

It is also known as the "manufacturer's deduction".

BREAKING DOWN 'Domestic Production Activities Deduction'

The type of domestic production activities that qualify for this deduction are fairly broad. Businesses that qualify for this deduction must complete Form 8903. The deduction cannot exceed the adjusted gross income of sole proprietors or owners of partnerships or Sub S corporations. It is also limited to 50% of W-2 wages paid to employees.

RELATED TERMS
  1. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
  2. Above The Line Deduction

    Above the line deductions are certain types of deductions that ...
  3. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
  4. IRS Publication 936

    A document published by the Internal Revenue Service (IRS) that ...
  5. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  6. Schedule A

    Schedule A is a U.S. income tax form that is used by taxpayers ...
Related Articles
  1. Taxes

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  2. Taxes

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  3. Taxes

    Why You Should Itemize Your Tax Deductions

    This strategy of moving your tax deductable payments and donations to the following year could mean hundreds more on your return.
  4. Insurance

    What's a Deductible?

    With insurance, a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss.
  5. Taxes

    Top Tax Tips to Deduct Investment Management Fees

    Investment expenses can be deducted by those who meet three main criteria. Here's what they are and how they work.
  6. Small Business

    Writing Off the Expenses of Starting Your Own Business

    Learn how to navigate the complicated rules for writing off the expenses of starting your own business. It could save you a lot of money.
  7. Taxes

    Top Tax Deductions For Brokers

    If you are paying out of pocket, you can make your business expenses work for you at tax time.
  8. Taxes

    10 Tax Benefits For The Self-Employed

    Running your own business has both personal and financial perks.
  9. Taxes

    The Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  10. Financial Advisor

    20 Medical Expenses You Didn't Know You Could Deduct

    To lower your tax bill, be sure not to miss out on these commonly overlooked medical tax deductions.
RELATED FAQS
  1. What are the deductions taken to determine AGI (adjusted gross income)?

    Read more about the deductions taken to arrive at adjusted gross income, or AGI, including the differences between above ... Read Answer >>
  2. How is the deductible I paid for my insurance claim treated for tax purposes?

    Find out how your health insurance deductible is treated for tax purposes and under what conditions you may be able to deduct ... Read Answer >>
  3. How do I know whether to itemize deductions or take the standard deduction?

    Taking the standard deduction is the easiest and most common method chosen by filers, but many taxpayers may wind up paying ... Read Answer >>
  4. Which is better for tax deductions, itemization or a standard deduction?

    Each deduction that you claim may result in a decrease in the amount of taxes that you owe. However, whether you receive ... Read Answer >>
  5. What happens if my insurance claim falls below the deductible level?

    Find out what happens if your insurance claim falls below the level of your deductible, including the basics of deductibles, ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center