Tax deductions help businesses and individuals reduce the amount of taxes they have to pay each year. This is done by taking advantage of special tax treatments and deductions for particular types of activities, expenses or investments. Common tax deduction categories include employee-related expenses, business start-up costs, home office expenses, car and travel expenses, charitable contributions, and medical and dental expense deductions. By utilizing these specific deductions, businesses can maximize the amount of income that goes back into their operations and individuals can receive a refund on the taxes owed. Understanding the different categories of tax deductions and taking advantage of them wisely will help you avoid paying too much in taxes.