Deduction/dɪˈdʌkʃn/ Definition 1 of 3Pro Tip 1/3Financial Context Deduction is often used when talking about financial situations, like taxes or paychecks. After all the deductions, my take-home pay is much less. Pro Tip 2/3Not Always Money Though common in finance, 'deduction' can refer to the reduction of other things, too. I got a deduction in points for late assignment submission. Pro Tip 3/3Negative Connotation 'Deduction' often implies that something is being taken away or reduced. A deduction in quality was noticed after the budget cuts.