Evaluating the Impact of Tax Incentives and Refunds on Individual Tax Returns: A Qualitative Research Study

Abstract

Tax revenue serves as an essential financial resource for governments, allowing them to support developmental projects and maintain the efficient operation of a nation. The taxes gathered are closely associated with public services such as healthcare, education, and infrastructure, which are crucial for enhancing the quality of life for citizens. Tax regulations, including deductions and credits, greatly influence individual taxpayers and shape their economic well-being. This document investigates the impact of these tax deductions and credits on Individual Tax Returns (ITR) over a specified timeframe, aiming to comprehend the implications of certain tax policies on the financial results for taxpayers.

The primary goal of the research is to assess the influence of established factors such as income, profession, salary, and exemptions on the favourable outcomes of tax deductions and credits, as reflected in individual tax filings. By examining these factors, the paper seeks to identify how each element affects the effectiveness and overall influence of deductions and credits on the ITR of individual taxpayers. The research employs a logistic regression model to examine these connections and evaluate how specific factors contribute to the positive effects of tax deductions and credits.

The findings of the study indicate significant relationships among the selected factors, highlighting income as the most critical element in determining the beneficial impact of tax deductions and credits on ITR. The level of income, more than profession, salary, or exemptions, significantly affects the advantages a taxpayer gains from deduction and credit programs. This observation is consistent with the common belief that individuals with higher incomes generally face larger tax responsibilities and may not realize as direct benefits from deductions and credits as those with lower incomes. Conversely, individuals with lower income levels frequently experience more considerable financial relief from tax policies aimed at reducing their obligations.

The analysis also underscores the significance of particular trends and frameworks within the chosen data, illustrating how tax deductions and credits can be strategically utilized to mitigate tax inequality. These policies are crafted to foster a fairer tax structure by ensuring that individuals with lower incomes receive more substantial benefits, while those with higher incomes contribute a larger proportion of taxes. The paper emphasizes how recognizing these trends can assist policymakers in creating more effective and targeted tax systems that can help reduce economic inequalities.

In summary, this study highlights the significance of tax deductions and credits in shaping the financial results of individual taxpayers. The logistic regression model illustrates that income is a key factor in determining the effectiveness of these tax policies. The results indicate that tax deductions and credits, when designed with careful consideration, can have a positive effect on ITR, fostering fairness and equity within the tax framework. By identifying the factors that most significantly impact individual tax returns, this research offers valuable insights for policymakers aiming to refine tax policies and enhance the overall tax system for all citizens.