Tax Deductions
Tax deductions are expenses that can be subtracted from a person’s taxable income. This reduces the amount of income that is subject to taxation, resulting in a lower tax liability. Common deductions include mortgage interest, charitable donations, medical expenses, and state and local taxes. Deductions can be taken for a variety of expenses, depending on the taxpayer’s filing status and other factors.
History of Tax Deductions
Tax deductions have been around since the early days of taxation. In the United States, the first income tax was introduced in 1861 to help fund the Civil War. The first deductions were for war-related expenses, such as military service and medical expenses. Over time, deductions have been added for a variety of expenses, including charitable donations, mortgage interest, and state and local taxes.
Comparison of Tax Deductions
| Type of Deduction | Maximum Deduction |
|---|---|
| Mortgage Interest | $750,000 |
| Charitable Donations | 50% of Adjusted Gross Income |
| Medical Expenses | 10% of Adjusted Gross Income |
| State and Local Taxes | $10,000 |
Summary
Tax deductions are expenses that can be subtracted from a person’s taxable income, resulting in a lower tax liability. Deductions have been around since the early days of taxation and have been added for a variety of expenses. For more information about tax deductions, visit the Internal Revenue Service website or consult a tax professional.
See Also
- Tax Credits
- Tax Exemptions
- Taxable Income
- Tax Brackets
- Taxable Gifts
- Taxable Property
- Taxable Wages
- Taxable Interest
- Taxable Dividends
- Taxable Benefits
