1

deductible

play
adjective de·duct·ible \ di-ˈdək-tə-bəl , dē- \

Definition of deductible

:allowable as a deduction
  • expenses that are deductible from taxable income

deductibility

play \-ˌdək-tə-ˈbi-lə-tē\ noun

Examples of deductible in a Sentence

  1. The trip was deductible as a business expense.

Recent Examples of deductible from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'deductible.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of deductible

1856


2

deductible

noun

Definition of deductible

:a clause in an insurance policy that relieves the insurer of responsibility for an initial specified loss of the kind insured against; also :the amount of the loss specified in such a clause

Examples of deductible in a Sentence

  1. I have an insurance policy with a $1,000 deductible.

Recent Examples of deductible from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'deductible.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of deductible

1929


Financial Definition of DEDUCTIBLE

deductible

What It Is

In the finance world, deductible is usually short for tax-deductible, which refers to an expense that reduces the amount of income that is subject to tax.

In the insurance world, a deductible is a required payment from the insured to the insurer in order to trigger coverage.

How It Works

For example, let's assume John Doe pays $10,000 for mortgage interest last year. He and his wife earned $150,000 from their jobs last year. Based on their circumstances, they can get a deduction for the mortgage interest (meaning they can deduct it from their taxable income). As a result, they must pay federal income tax on $150,000 - $10,000 = $140,000.

Anything that is deductible has a special financial value. In our example, if that mortgage interest hadn't been deductible, John Doe would have paid income tax on that $10,000 of income. If he's in the 28% tax bracket, that could amount to $2,800. Thus, the fact that mortgage interest is deductible saves him $2,800 in taxes.

Why It Matters

When things are deductible, they lower a person's tax bill, which is why taxpayers invest time in seeking out deductions and structuring transactions to maximize those deductions. There are hundreds of different types of tax deductions, though some deductions are available only to people in certain income ranges (typically under $100,000 to $150,000) and most are available only to people in certain circumstances or companies in certain industries.


DEDUCTIBLE Defined for English Language Learners

deductible

play
adjective

Definition of deductible for English Language Learners

  • : able to be subtracted from an amount of money


deductible

noun

Definition of deductible for English Language Learners

  • : an amount of money that you have to pay for something (such as having your car fixed after an accident) before an insurance company pays for the remainder of the cost


Law Dictionary

1

deductible

play
adjective de·duc·ti·ble \ di-ˈdək-tə-bəl \

legal Definition of deductible

:allowable as a deduction

deductibility

play \-ˌdək-tə-ˈbi-lə-tē\ noun

2

deductible

noun

legal Definition of deductible

:a clause in an insurance policy that relieves the insurer of responsibility for an initial specified loss of the kind insured against; also :the amount specified in such a clause — compare franchise 4a


Seen and Heard

What made you want to look up deductible? Please tell us where you read or heard it (including the quote, if possible).

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

WORD OF THE DAY

a strongly worded attack

Get Word of the Day daily email!

Test Your Vocabulary

Merriam-Webster's New Words Quiz—Fall 2017 Edition!

  • young-plant-shoots
  • Which of the following is a new sense of the word bunny?
Spell It

Can you spell these 10 commonly misspelled words?

TAKE THE QUIZ
Bee Cubed

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!