What does a tax deduction accomplish?

A tax deduction reduces the taxable income amount. This means that when individuals or businesses take deductions, they lower the amount of income that is subject to taxation, which in turn can decrease the overall tax liability. For example, if a person earns $50,000 and has a tax deduction of $5,000, only $45,000 is considered when calculating their taxes. This reduction can significantly impact the amount of taxes owed.

In the context of the other options, the first choice suggests that a tax deduction increases the amount owed, which contradicts the fundamental purpose of a deduction. The third choice mentions a refund on taxes paid, which relates to tax credits rather than deductions, as credits reduce the tax bill directly rather than the taxable income. The fourth option states that a tax deduction eliminates the need to pay taxes entirely, which is not accurate since deductions only lower taxable income, not the total amount of tax owed to zero. Thus, option B correctly identifies the key function of a tax deduction.