Tax deductible definition

What is Tax Deductible?

An expenditure is considered to be tax deductible when it can be subtracted from the adjusted gross income line item on a tax return, thereby reducing the amount of income that is subject to taxation. Tax laws specify which expenditures can be treated in this manner; they are considered to be any expense that is ordinary, necessary, and reasonable. Tax deductible expenditures will vary by region, depending on the tax policies of the applicable government.

Examples of Tax Deductible Expenses

Examples of tax deductible expenditures are as follows:

  • Business use of your car

  • Business use of your home

  • Charitable contributions

  • Money you put into an IRA

  • Mortgage interest

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