Which of the following best describes personal deductions?

The concept of personal deductions is best described by the option that indicates these deductions reduce the tax liability of individuals. Personal deductions allow taxpayers to lower their taxable income, which ultimately results in a reduced overall tax liability. These deductions can include various expenses, such as mortgage interest, medical expenses, and charitable contributions, which individuals can claim on their tax returns.

This reflects the core function of personal deductions: they directly impact the amount of income that is subject to taxes, making it an essential aspect of individual tax planning and liability calculation. By effectively decreasing taxable income, personal deductions allow taxpayers to retain more of their earnings and potentially move into a lower tax bracket, resulting in even greater tax savings.