TAX ALLOWANCE Meaning and
Definition
-
Tax allowance refers to a specific amount of money granted by the government on an annual basis for the purpose of reducing an individual's or business's taxable income. It serves as a deduction or exemption, allowing taxpayers to reduce the overall amount of tax they owe. These allowances are established by legislative bodies and may vary across different jurisdictions.
Tax allowances can be categorized into various types, including personal allowances, which are granted to individuals based on their tax filing status and circumstances. Personal allowances are often allocated for an individual and their dependents and typically aim to ensure a basic living standard is tax-free.
Businesses may also have tax allowances that are specifically designed to provide incentives for certain activities or investments. For instance, governments may establish tax allowances for research and development expenditure, machinery and equipment purchases, or employee training. These types of tax allowances encourage businesses to engage in activities that promote economic growth, innovation, and employment.
Tax allowances are deducted directly from an individual's or business's total income, thereby reducing the amount of taxable income. Consequently, this decreases the tax liability, resulting in a lower tax bill. Tax allowances may be subject to certain limitations, phase-outs, or income thresholds, meaning that they may not apply to everyone or may be reduced for higher-income individuals or businesses.
Overall, tax allowances are measures implemented by governments to encourage certain behaviors, support specific sectors, or provide relief to individuals and businesses by reducing their tax burden.
Common Misspellings for TAX ALLOWANCE
- rax allowance
- fax allowance
- gax allowance
- yax allowance
- 6ax allowance
- 5ax allowance
- tzx allowance
- tsx allowance
- twx allowance
- tqx allowance
- taz allowance
- tac allowance
- tad allowance
- tas allowance
- tax zllowance
- tax sllowance
- tax wllowance
- tax qllowance
- tax aklowance
- tax aplowance
Etymology of TAX ALLOWANCE
The word "tax allowance" is a compound term formed by combining "tax" and "allowance".
The term "tax" originated from the Latin word "taxare", meaning "to estimate" or "to rate". It was used to describe the practice of imposing a charge or levy on individuals or entities for the purpose of generating revenue for the government. Over time, the word "tax" evolved to specifically refer to the financial charges individuals or businesses must pay to the government as part of their income, property, sales, or other types of taxes.
The word "allowance" has its roots in Old French, derived from the verb "allouer", meaning "to assign" or "to grant". It developed from the Latin word "allodare", which meant "to assign as a portion" or "to give a share".
Infographic
Add the infographic to your website:
