Business, Legal & Accounting Glossary

Definition: Deduction

Quick Summary of Deduction

An amount or part taken away from a total, especially an expense that you do not have to pay taxes on, or the process of taking away an amount or part.

What is the dictionary definition of Deduction?

Dictionary Definition

1. That which is deducted; that which is subtracted or removed
2. A sum that can be removed from tax calculations; something that is written off
3. logic A process of reasoning that moves from the general to the specific, in which a conclusion follows necessarily from the premises presented so that the conclusion cannot be false if the premises are true.

n. an expenditure which an income tax payer may subtract from gross (total) income to determine taxable income. This is not the same as an exemption, which is for one’s marital status, age over 65, blindness and number of dependents (e.g. children), which, added together, reduce the tax owed.

Full Definition of Deduction

1. Accounting: Business expenses or losses which are legally permitted to be subtracted from the gross revenue of a firm in computing its taxable income.
2. Logic: See deductive reasoning.
3. Taxation: Fixed amount or percentage permitted by taxation authorities that a taxpayer can subtract from his or her adjusted gross income to arrive at the taxable income.

In tax law, an amount that you can subtract from the total amount of income on which you owe tax. Examples of US federal income tax deductions include mortgage interest, charitable contributions, and certain state taxes.

Synonyms For Deduction

inference, reduction, rebate, discount, subtraction

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Deduction. Payroll & Accounting Heaven Ltd. September 25, 2021
Chicago Manual of Style (CMS):
Deduction. Payroll & Accounting Heaven Ltd. (accessed: September 25, 2021).
American Psychological Association (APA):
Deduction. Retrieved September 25, 2021, from website:

Definition Sources

Definitions for Deduction are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 27th April, 2020 | 5 Views.