By TurboTax Tax deductions lower your taxable income and the amount of income tax you have to pay. Explore some of the most popular deductions here. Key Takeaways • Tax deductions reduce your taxable income whereas tax credits reduce your tax liability on a dollar-for-dollar basis. • Some tax deductions, called above-the-line deductions or adjustments to income, can be taken from gross income to arrive at adjusted gross income. • Tax deductions taken after your adjusted gross income are called below-the-line deductions and lead to your taxable income for the year. TurboTax Live experts look ou…