tax expenditures

Tax expenditures are gaps between the amount of revenue the government would collect if everyone paid full taxes and the reduced amount due to special exclusions, deductions, credits, or incentives built into the tax code. Essentially, they are the ways the government encourages certain behaviors or supports specific groups by offering tax relief, which results in less tax revenue being collected. These are similar to government spending programs but are delivered through the tax system instead of direct funding. They are often used to promote economic or social goals without explicit budget allocations.