loophole

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noun loop·hole \ˈlüp-ˌhōl\

Updated on: 26 Jul 2017

Definition of loophole

1a : a small opening through which small arms may be firedb : a similar opening to admit light and air or to permit observation
2 : a means of escape; especially : an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

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Examples of loophole in a Sentence

She took advantage of a loophole in the tax law.
His attorney has been hunting for a loophole that would allow him to get out of the deal.
tried to close a loophole in the new legislation

Recent Examples of loophole from the Web

But the freeze has a crucial loophole that allows pay increases for employees promoted into existing job classifications.

— david garrick, sandiegouniontribune.com, "San Diego creating more high-paying positions that critics call Prop. B loophole," 17 July 2017
According to regulators, the increase is caused by contractors that abuse AOB clauses and exploit legal loopholes.

— by andrea januta, miamiherald, "Wondering if your homeowner’s insurance will protect you? You’re not alone," 16 July 2017
Taking advantage of a loophole in the rule, the Royals have a translator in coach Pedro Grifol who is not professionally trained to interpret responses verbatim.

— maria torres, kansascity, "Lost in translation: MLB requires Spanish translators, Royals don’t exactly follow rule," 12 July 2017
According to USA Today, at least one expert said the memo’s language offered a loophole for departments to back out of protective provisions by questioning if the relatively new policy would hinder readiness for combat.

— leigh cuen, Teen Vogue, "All the Ways Donald Trump Broke His Promises to LGBTQ People," 8 July 2017
Meanwhile, police and city leaders have been slow to reveal camera use guidelines, have resisted requests for footage and have revealed some significant loopholes in their coverage.

— lawrence specker, AL.com, "Stimpson to seek ruling on Mobile's police body-cam policy," 5 July 2017
One big loophole remains: Amazon's policies don't apply to other companies selling goods through its website, and many of those transactions remain untaxed.

— joshua brustein, Bloomberg.com, "Trump Attacks the 'AmazonWashingtonPost' Over Taxes," 28 June 2017
For about a decade, the tax abatements and legal loopholes that Trump was able to finesse came about, in large part, because of Cohn.

— vanityfair.com, "How Donald Trump and Roy Cohn’s Ruthless Symbiosis Changed America," 28 June 2017
Panther was responding to questions from state Rep. Mat Erpelding, D-Boise, who sponsored a bill this spring that would have closed the purchasing loophole.

— nicole blanchard, idahostatesman, "You can’t set one off, but can you buy a Roman candle in Idaho? AG’s office says no.," 27 June 2017

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

Origin and Etymology of loophole

¹loop

NEW! Time Traveler

First Known Use: 1591

See Words from the same year

Other Legal Terms

actionable, alienable, carceral, chattel, complicity, decedent, larceny, malfeasance, modus operandi

loophole

verb loop·hole

Definition of loophole

transitive verb
: to make loopholes in

First Known Use of loophole

1664

Financial Definition of LOOPHOLE

loophole

noun

What It Is

A loophole is an exception that allows a system to be circumvented or avoided. It usually refers to legal, taxation, or security strategies that are exploited for personal gain.

How It Works

Loopholes are failures of a system to account for all conditions, variables, or exceptions. To illustrate a legal loophole, consider a local development law that requires even an unoccupied building to pay real estate taxes so long as it receives a certificate of completion. In order to avoid paying taxes, a builder may exploit this loophole and choose not to "complete" the building.

An example of a tax loophole is the tax break for small businesses who invest in "heavy vehicles". The tax break applies if the vehicle is used at least 50% of the time for the business. Business owners may exploit this loophole by upgrading their own vehicles to SUVs, which are considered "heavy" under the tax law, and thereby gain a personal financial advantage.

In most instances, loopholes that lead to excessive abuse are corrected by subsequent regulations and laws.

Why It Matters

While loopholes may save money or allow a purchase that would otherwise not be economical, the use of loopholes is considered questionable. Exploiting loopholes may lead to intensive scrutiny and audits, or even just a feeling of bad faith. For example, a tax payer should be aware when a tax consultant advises of specific tax advantage of whether the advantage is claimed on the basis of an allowable deduction or a loophole.

Source: Investing Answers