Domestic Production Activities Deduction


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.

  1. Insourcing

    Assigning a project to a person or department within the company ...
  2. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  3. Marginal Cost Of Production

    The change in total cost that comes from making or producing ...
  4. Expense

    1. The economic costs that a business incurs through its operations ...
  5. Qualified Production Activities ...

    Income derived from domestic production that qualifies for reduced ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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