A provision in the tax code that reduces the tax liability of an individual or a firm, granted on the basis of a characteristic of the taxpayer or an action of the taxpayer. A reduction in the marginal rate of income tax for people aged over 65 is an example of a tax relief based on a characteristic. An enhanced rate of depreciation for investment in energy-efficient equipment which reduces taxable profit is an example of a tax relief based on an action. See also tax expenditure.