In financial terms, what does the act of making deductions often refer to?

Making deductions in financial terms typically refers to the process of subtracting certain expenses from one's total income to determine taxable income. This allows individuals or businesses to reduce the amount of income that is subject to taxation, thus potentially lowering their overall tax liability. Deductions can include various expenses, such as certain medical costs, mortgage interest, and charitable contributions, which are allowed by tax laws.

In contrast, the other options focus on different aspects of finance. Increasing income pertains to earning more money, which does not directly relate to the concept of deductions. Calculating interest involves determining how much interest is earned or owed on loans or investments, which is also unrelated to the act of making deductions. Budgeting expenses, while important for financial planning, is about managing spending rather than relating to income reduction for tax purposes.