loophole

noun loop·hole \ ˈlüp-ˌhōl \

|Updated on: 15 Aug 2018

Definition of loophole

1 a : a small opening through which small arms may be fired

b : 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

The company that has benefited most from this loophole is probably Amazon, America’s biggest online retailer.

— The Economist, "Amazon wins from a Supreme Court ruling," 10 July 2018
The most obvious way to give it back: don’t implement such a tax by writing the former loophole into state law.

— michael dresser, baltimoresun.com, "Save it, spend it or give it back? Future online sales tax windfall stirs debate in Maryland," 22 June 2018
Todd Ringle tweeted about the new rules Tuesday and explained to drivers in a thread that while these colors were already required by law, the new legislation features updated language and eliminates possible loopholes.

— justin l. mack, Indianapolis Star, "Make sure your headlights comply with this new Indiana law, starting July 1," 13 June 2018
With the Rent Board’s permission, in what city officials and tenants’-rights groups call an unfair loophole, landlords may permanently increase rents by up to 7 percent on top of the annual allowable increases.

— dominic fracassa, San Francisco Chronicle, "SF supes move closer to nixing rent hikes that pay for landlords’ loans, taxes," 18 May 2018
The president is rightly frustrated that existing loopholes and the lack of congressional action have prevented this administration from fully securing the border and protecting the American people.

— abigail tracy, The Hive, "Trump Explodes at Staff for Not Deporting Immigrants Faster," 11 May 2018
There are bureaucratic loopholes that the university can use to remove the structure.

— martin fritz huber, Outside Online, "Farewell, Old Hayward Field," 27 Apr. 2018
That was one reason why, in an Islamic state, there were so many loopholes through which foreigners could drink.

— charles p. pierce, SI.com, "Why Tom Brady Has No Business Promoting Qatar," 25 Apr. 2018
Even accepting this long-shot loophole, the scene still doesn't work.

— joe pappalardo, Popular Mechanics, "Hollywood Has No Idea How Nukes Work," 2 Apr. 2018

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

in the meaning defined at sense 1a

See Words from the same year

Other Legal Terms

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

loophole

verb

Definition of loophole

loopholed; loopholing; loopholes

transitive verb

: to make loopholes in

First Known Use of loophole

1664

in the meaning defined above

See Words from the same year

NEW! Time Traveler

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