What are tax deductions?

Tax deductions are expenses or allowances that reduce a taxpayer's taxable income, thereby lowering the amount of income subject to taxation. They can include various expenses such as mortgage interest, medical expenses, charitable contributions, and certain business expenses, either through itemized deductions or the standard deduction.

What is a tax deductible expense?

A tax deductible is an expense that an individual taxpayer or a business can subtract from adjusted gross income (AGI). The deductible expense reduces taxable income and therefore reduces the amount of income taxes owed.

What is the difference between a standard deduction and a tax deduction?

A tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions.