A deduction does not mean either. It's an amount that you don't have to pay tax on. For example, If you had $5,000 in income, and a $1,000 deduction, you would only have to pay tax on $4,000 of income. What you save by having a deduction is only the amount of tax you would have paid on that amount of income. Since you had a deduction of $1,000 in income, you save the tax you would have paid on that $1,000. The exact amount depends on your tax rate. If you're paying 10% in tax on your income, you would save $100 by having this deduction.