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Deduction

An amount that can be subtracted from your total income to reduce the amount of income subject to tax, resulting in a lower tax bill.

Qualified tips

For the purpose of this bill, these are cash tips received by an individual in an occupation that traditionally received tips, as determined by the U.S. Treasury. There's an income limit for who can claim them.

Taxable year

The annual period used for calculating income taxes. For most individual taxpayers, this is the calendar year (January 1 to December 31).

Internal Revenue Code of 1986

The main body of federal tax law in the United States.

Social Security taxes

Taxes paid by both employees and employers to fund Social Security and Medicare programs, often referred to as FICA taxes.

Itemize deductions

Choosing to list individual eligible expenses (like mortgage interest, state and local taxes, charitable contributions) to reduce taxable income, instead of taking a standard deduction.

Standard deduction

A fixed dollar amount that taxpayers can subtract from their income before tax, if they choose not to itemize their deductions.