Interest - The fee charged by a lender to a borrower for the use of borrowed money.

This fee is usually expressed as an annual percentage of the principle; the rate is dependent upon the time value of money, the credit risk of the borrower, and the inflation rate.

For tax purposes this is considered income and is taxable at regular income rates. Interest paid for money, which a taxpayer is borrowing for valid purposes, is a valid business expense.

Interest that an individual pays is in many cases also deductible if it is being paid on a home equity loan.

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