My understanding is that tax deductions "deduct" from the Adjusted Gross Income value. Is that right?
As a very simple example, let's say I have an AGI of $10 and I owe $3 in taxes (before any itemized deductions). If I'm eligible for a deduction of $1, would that dollar subtract from the amount I OWE in taxes? Or would it subtract from the AGI?
I think it would come from AGI, so I would have a new taxable income of $9 and owe $2.7 dollars in taxes.