Which concept relates to the legal reduction of tax obligations?

The choice of tax avoidance is correct because it refers to the legal strategies that individuals and businesses use to minimize their tax liabilities within the framework of the law. Tax avoidance involves the use of various deductions, credits, and allowances that are permitted by tax legislation to reduce the amount of income that is subject to taxation. This concept is distinct from tax evasion, which involves illegal practices to conceal income or misrepresent tax obligations to avoid paying taxes.

Tax free threshold, while related to personal taxes, refers specifically to an income level at which taxpayers do not owe any tax; it is not focused on strategies to reduce tax obligations legally. Equity, in the context of taxation, refers to fairness in the tax system, and does not directly address the methods of reducing tax burdens. Thus, tax avoidance is the most fitting concept regarding the legal reduction of tax obligations.