Many researchers strive to research on ways on how to improve the performance of RFID system and many papers were written to solve one of the major drawbacks of potent technology related with data management. As RFID system captures billions of data, problems arising from dirty data and large volume of data causes uproar in the RFID community those researchers are finding ways on how to address this issue. Especially, effective data management is important to manage large volume of data. Data reduction techniques in attempts to address the issues on data are also presented in this paper. This paper introduces readers to a new data reduction algorithm that might be an alternative to reduce data in RFID Systems. A process on how to extract data from the reduced database is also presented. Performance study is conducted to analyze the new data reduction algorithm. Our performance analysis shows the utility and feasibility of our categorization reduction algorithms.