A tax credit will reduce your tax bill more than a tax deduction for the same amount, if all other factors are equal.
<h3>Which is more valuable, tax credits or deductions?</h3>
A tax deduction lowers the amount of your taxable income, which is used to compute your tax responsibility, whereas a tax credit lowers your tax liability dollar for dollar. Because they lower your tax burden by one dollar for every dollar of the credit, tax credits are typically more valuable.
<h3>What distinguishes a tax credit from a tax deduction?</h3>
Dollar per dollar, tax credits lower taxable income. Tax credits are typically more beneficial than tax deductions because they directly and dollar-for-dollar lower a taxpayer's gross tax liability.
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