A deduction in the context of tax refers to an expense that can be subtracted from an individual's or business's total income to reduce the amount of income that is subject to taxation. Common deductions include expenses for mortgage interest, charitable contributions, and medical expenses. By lowering taxable income, deductions can lead to a smaller tax bill. Tax deductions can vary based on the type of taxpayer, such as individuals or businesses, and the specific tax laws in place. Some deductions are standard, while others require itemization. Understanding available deductions can help taxpayers maximize their savings and ensure compliance with IRS regulations.