Floors

Tax Glossary Definition

Floors

In taxes, "floors" typically refer to thresholds or minimum amounts below which certain tax provisions do not apply. For example, a tax deduction might only be available for medical expenses that exceed a certain percentage of the taxpayer's income (the floor).

Example 1: Medical Expense Deduction (U.S. Context)

  • Taxpayer can deduct medical expenses only if they exceed 7.5% of adjusted gross income (AGI).

  • Scenario:

    • AGI = $50,000

    • Medical expenses = $3,000

    • 7.5% of AGI = $3,750

  • Result: Deduction = $0 (expenses below the floor)

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