What Is Tax Relief?

Tax Relief Explained in Less Than 4 Minutes

Person doing tax paperwork on a laptop at the kitchen counter

Marko Geber / Getty Images


Tax relief is any type of allowance, often from governments, that reduces someone’s tax liability or improves their tax situation in any other sort of way, such as by delaying filing deadlines.

Key Takeaways

  • Tax relief means reducing your tax burden, which can include providing tax reductions or extending tax-filing deadlines.
  • Tax relief can be instituted at the federal, state, or local level.
  • Some tax relief measures are permanent, while others apply to temporary situations, such as a natural disaster or the COVID-19 pandemic.

How Tax Relief Works

Tax relief can be any allowance that reduces your tax burden, which might be done at the federal, local, or state level. Many types of tax relief exist, such as temporary responses to natural disasters or permanent laws that reduce the burden on certain taxpayers.

Tax relief is often achieved through new rules that reduce how much you owe in taxes, such as by providing a tax exemption or a tax credit. It may also be done through rules that reduce the difficulty of filing or paying taxes, including by extending filing and payment deadlines.

Tax relief can also refer to programs that assist you in managing and resolving back tax debts that you owe. The Internal Revenue Service (IRS) provides these tax relief programs to taxpayers, such as via an offer-in-compromise.

The IRS often provides federal tax relief during events like hurricanes or wildfires. Sometimes, IRS tax relief programs don't require taxpayers to apply for the relief, while in other cases, an application may be required.


Some private companies offer “tax relief” service to help you manage large tax debts. But these companies aren’t always legitimate. It is safer to work out a payment plan directly with the IRS.

Examples of Tax Relief

Tax relief can come in many forms and for various reasons. Below are some examples of changes in tax laws designed to help people and businesses.

Natural Disasters

Disaster declarations from the Federal Emergency Management Administration (FEMA) can result in tax relief. These policy decisions may or may not be accompanied by federal laws.

In early 2022, the IRS announced tax relief related to wildfires and winds that occurred in Colorado. Some of the specifics of this tax relief measure included extending individual and business tax filing and payment deadlines. Other measures included allowances for taxpayers to deduct property losses if they weren't covered by insurance.

Federal and Local Tax Breaks

Some tax relief programs are designed to be a change to tax policy. The American Taxpayer Relief Act of 2012 made many federal income-tax reductions permanent.

Other types of tax relief occur at the state or local levels. Senior citizens in many areas are eligible for property-tax reductions, which can vary based on income.

The COVID-19 Pandemic

Another example of tax relief applies to measures taken in response to the COVID-19 pandemic. The passage of the Tax Relief Act of 2020 provided tax relief by making direct stimulus payments to individuals.

These stimulus payments were structured as refundable tax credits. Many taxpayers didn't have to do anything to get the relief since the IRS instituted them automatically. However, the IRS required some taxpayers who hadn't filed a tax return in the previous two years to file a return to get the relief.

What Tax Relief Mean for Individual Taxpayers

Knowing about both federal and local tax relief options can help you legally reduce tax liability. However, there can be many nuances to tax relief rules, and it can be hard to stay on top of everything.

To keep track of all the relief options, you may prefer to work with a tax professional. They can help you find and use tax relief measures, such as changing your filing timeline or claiming additional deductions. Most tax preparation software will also be updated to include current forms of tax relief available to you.

Frequently Asked Questions (FAQs)

What is tax relief?

Tax relief involves helping taxpayers with managing their tax burden. Tax relief can include providing tax reductions, such as a reduction in property taxes based on income. Tax relief can also occur during natural disasters and recessions. Some tax relief measures are designed to be permanent, while others are temporary measures.

Is tax relief the same as a tax credit?

Tax relief and tax credits are not necessarily synonymous with each other. A tax credit reduces your taxes owed to the IRS. For example, if you owed $5,000 in taxes and you received a $2,000 tax credit, you would owe the IRS $3,000.

However, tax relief might include extending tax-filing deadlines during a natural disaster or a stimulus check paid to taxpayers experiencing economic hardship.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "Coronavirus Tax Relief."

  2. IRS. "Disaster Assistance and Emergency Relief for Individuals and Businesses."

  3. Federal Trade Commission Consumer Information. "Tax Relief Companies."

  4. IRS. "Tax Relief in Disaster Situations."

  5. IRS. "IRS Announces Tax Relief for Colorado Wildfires and Straight-Line Winds."

  6. Congress.gov. "H.R.8 - American Taxpayer Relief Act of 2012."

  7. Congressional Research Service. "The COVID-Related Tax Relief Act of 2020 and Other COVID-Related Tax Provisions in P.L. 116-260," Page 2.

  8. IRS. "Economic Impact Payments: What You Need To Know."

Related Articles