Tax Deduction

A tax deduction is an expense or allowance that reduces your taxable income, meaning you pay less in taxes. Think of it as a legitimate expense the government recognizes, like mortgage interest, charitable donations, or work-related costs. By deducting these amounts from your total income, your overall taxable income decreases, which can lower your tax bill. It doesn't directly reduce the amount of tax you owe, but it lowers the income on which your taxes are calculated, ultimately saving you money when you file your tax return.