Which term refers to the portion of income for which you are not taxed, used to reduce gross tax to find payable tax?

Which term refers to the portion of income for which you are not taxed, used to reduce gross tax to find payable tax?

• A. Budget
• B. Tax credits
• C. Quality
• D. IT

Answer: (B)

The key idea here is how tax relief reduces the amount of tax you owe. A tax credit is a sum that directly lowers the tax payable after your gross tax has been calculated, so it reduces your bill rather than reducing the income that’s taxed. This matches the description of a portion of tax that is not paid and used to bring the tax bill down to what you owe. For example, if your gross tax is €2,000 and you have a €600 tax credit, your payable tax would be €1,400. This differs from deductions or allowances, which lower the income that is taxable in the first place. The other options aren’t tax reliefs: a budget is a government spending plan, and the remaining terms aren’t related to tax.

The key idea here is how tax relief reduces the amount of tax you owe. A tax credit is a sum that directly lowers the tax payable after your gross tax has been calculated, so it reduces your bill rather than reducing the income that’s taxed. This matches the description of a portion of tax that is not paid and used to bring the tax bill down to what you owe. For example, if your gross tax is €2,000 and you have a €600 tax credit, your payable tax would be €1,400. This differs from deductions or allowances, which lower the income that is taxable in the first place. The other options aren’t tax reliefs: a budget is a government spending plan, and the remaining terms aren’t related to tax.