What term describes the provisions within tax law that aim to encourage certain behaviors through deductions or credits?

The term that describes the provisions within tax law aimed at encouraging certain behaviors through deductions or credits is "tax expenditure." Tax expenditures refer to the government's use of tax incentives to promote specific activities, such as charitable donations, investments in renewable energy, or education expenses. These incentives come in the form of deductions, credits, or exclusions that effectively reduce the amount of tax owed, thus influencing taxpayer behavior toward preferred activities or investments.

This mechanism is significant because it shapes economic and social policy by providing financial benefits for engaging in activities that the government considers desirable. For example, offering a tax credit for electric vehicle purchases encourages consumers to choose environmentally friendly transportation options. Understanding tax expenditures is crucial for identifying how policy objectives can be achieved through the tax code, making this concept central to discussions about tax policy and fiscal management.