Tax Liability (or total tax bill) The amount of tax that must be paid. Taxpayers meet (or pay) their federal…
Tax-Exempt Interest Income Interest income that is not subject to income tax. Tax-exempt interest income is earned from bonds issued…
Tax Deduction An amount (often a personal or business expense) that reduces income subject to tax.
Tax Credit A dollar-for-dollar reduction in the tax. Can be deducted directly from taxes owed
Tax Avoidance An action taken to lessen tax liability and maximize after-tax income.