Tax Break


DEFINITION of 'Tax Break'

A tax break is a savings on a taxpayer's liability. A tax break provides a savings through tax deductions, tax credits, tax exemptions and other incentives. An example of a tax break is the First-Time Homebuyer Tax Credit which provided a tax credit up to $8,000 for qualified purchasers of primary residences on their 2009 and 2010 tax returns.


Tax breaks can greatly reduce a taxpayer's liability. Deductions are expenses that can be subtracted from gross income to reduce taxable income; credits reduce tax liability dollar-for-dollar and have a greater impact than deductions; exemptions occur where a tax for a certain item or type of income is reduced or eliminated.

  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Tax Benefit

    A tax benefit is an allowable deduction on a tax return intended ...
  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  5. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  6. After-Tax Income

    The amount of money that an individual or company has left over ...
Related Articles
  1. Stock Analysis

    US Telecom Price War: T-Mobile Vs. Verizon Vs. AT&T

    Find out how T-Mobile, Verizon and AT&T are waging an intense price war among mobile network providers and why investors are coming up short.
  2. Economics

    Is Puerto Rico the Next Greece?

    Find out why the Puerto Rican debt downgrade does not necessarily mean the Caribbean island territory is the next Greece with a looming major crisis.
  3. Taxes

    Cut Taxes By Reporting Property Damage

    Know the options you have for your insured property if and when a disaster strikes.
  4. Taxes

    Common Tax Mistakes To Avoid

    Find out what mistakes people often make on their returns, and how to avoid them on yours.
  5. Taxes

    Simple Last-Minute Tax Tips

    A little preparation and organization can take the stress out of last-minute tax filing.
  6. Taxes

    Tax Deductions You May Be Missing

    Knowing the tax deductions you're entitled to can make or break your bank account.
  7. Taxes

    The Ultimate Tax-Time Checklist

    Find out what information you need to pull together before filling out your return.
  8. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  9. Taxes

    Student Tax Breaks

    Education bills may not be as stressful as you think - these student tax breaks can help!
  10. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  1. Why do some oil refineries get tax exemptions?

    Oil refineries normally receive tax exemptions due to tax loopholes. The extracted fuel exemption, for example, one of the ... Read Full Answer >>
  2. 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 Full Answer >>
  3. Do tax brackets include Social Security?

    A portion of your Social Security benefits may be subject to federal taxation using tax brackets. Your tax bracket is determined ... Read Full Answer >>
  4. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  5. Do 401k contributions reduce AGI and/or MAGI?

    Traditional 401(k) contributions effectively reduce both adjusted gross income (AGI) and modified adjusted gross income (MAGI). ... Read Full Answer >>
  6. Are IRS audits random?

    While the U.S. Internal Revenue Service (IRS) conducts some of its tax audits using random selection based on a statistical ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center