Tax Credits

People often conflate tax credits with tax deductions. They're different!

A deduction decreases your taxable income, but a tax credit directly reduces the amount of taxes that you owe.

If you get a $1,000 deduction, you can expect to save about $250 in taxes (if you're in the 25% tax bracket).

However, a $1,000 credit will directly save $1,000 in taxes, regardless of your bracket.

All else being equal, credits are much more valuable then deductions.

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