Tax relief is any deduction from taxes allowed to taxpayers by federal or state tax authorities for certain expense categories. An example is allowing the deduction of interest paid on educational loans from the income tax payable. Tax relief also takes the form of full or partial tax exemptions for low- and moderate-income families. In some cases, tax relief includes releasing citizens from paying taxes immediately, particularly during cases of natural disasters and similar contingencies. An example is tax relief granted to families following the devastation caused by hurricanes in the south during 2005.

Tax relief helps everyone, particularly the low-income families. It is normally provided as deductions from any of the various taxes like income tax, state tax, property tax, etc. In 1992, a tax-relief program introduced by the Internal Revenue Service was specifically targeted at helping individuals and corporations settle back taxes. This helped persons who were in financial hardship to pay back at least a part of the taxes that they owed. This process, which allows taxpayers settle the back taxes that they owe for less than the full amount, is known as an offer in compromise.

Normally, tax relief works through a process where tax authorities review the ability of a taxpayer to pay taxes based on information regarding the person's income and assets. A tax relief is granted if it's found that the recovery of a certain tax is unreasonable on the grounds that asset values have significantly decreased. However, tax authorities grant a tax relief only if the taxpayer's request for relief is based on a valid reason as defined under law. Tax relief is also granted under special circumstances. In the case of taxes on inheritance and gifts, a relief can be granted if it's ascertained that the value of the assets received has significantly reduced.