Tax-Deductible Expense
Plain English
It's an expense you subtract from your taxable income before tax is calculated. Examples include INPS contributions paid by the self-employed and certain pension fund contributions. Less taxable income means less tax owed.
Why it matters
A deduzione lowers the base on which IRPEF is calculated, so it\'s most valuable for people in higher brackets. Knowing what you can deduct often makes the difference between an OK return and a great one.
Real example
"Each year, Diogo's commercialista in Massa Marittima deducted his private pension fund contributions from his taxable income. The tax saving was bigger than the same amount as a detrazione would have been at his rate."
Common confusion
Don\'t mix up deduzione with detrazione. Deduzione reduces taxable income. Detrazione reduces the tax already calculated. The maths is different.
Official source
Agenzia delle Entrate