Question

What is an income tax term meaning an investment that will reduce or shield other money from income tax?

Answer 1

A tax deduction is an investment that can be subtracted from taxable income, reducing income tax liability.

Step-by-step explanation:

The income tax term you are referring to is called a tax deduction.

A tax deduction is an expense or investment that can be subtracted from a person's or business's taxable income, resulting in a lower income tax liability.

For example, if someone invests in a tax-deductible retirement account, such as a traditional IRA or a 401(k), the amount they contribute to the account is subtracted from their taxable income, reducing the amount of income tax they owe.