Tax Benefit

DEFINITION of 'Tax Benefit'

A tax benefit is an allowable deduction on a tax return intended to reduce a taxpayer's burden while typically supporting certain types of commercial activity. A tax benefit allows some type of adjustment benefiting a taxpayer's tax liability.

BREAKING DOWN 'Tax Benefit'

Tax benefits provide an advantage to the taxpayer while typically benefiting another entity. An example of a tax benefit is an energy tax credit; taxpayers can qualify for certain tax credits for installing energy efficient systems in their homes, which benefits the environment while reducing the demand for fuel. Quite often tax benefits may be only available for a certain time period or tax year.

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