Tax incentives refer to government policies that provide individuals or businesses with financial benefits, such as deductions or credits, in order to encourage certain behaviors, such as investing or spending.
Related terms
Investment: Investment refers to the act of purchasing capital goods or assets with the expectation of generating future income or increasing productivity.
Tax deduction: A tax deduction reduces the amount of taxable income and lowers the overall tax liability.
Tax credit: A tax credit directly reduces the amount of taxes owed rather than reducing taxable income.