Tax Break

AAA

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.

INVESTOPEDIA EXPLAINS 'Tax Break'

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.

RELATED TERMS
  1. Tax Benefit

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

    A tax that governments impose on financial income generated by ...
  3. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that ...
  5. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  6. After-Tax Income

    The amount of money that an individual or company has left over ...
Related Articles
  1. Cut Taxes By Reporting Property Damage
    Taxes

    Cut Taxes By Reporting Property Damage

  2. Common Tax Mistakes To Avoid
    Taxes

    Common Tax Mistakes To Avoid

  3. Simple Last-Minute Tax Tips
    Taxes

    Simple Last-Minute Tax Tips

  4. Tax Deductions You May Be Missing
    Taxes

    Tax Deductions You May Be Missing

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center