What's the Difference Between a Tax Credit and a Tax Deduction?
General Tax Help & Disaster Relief
Key Insights
Understanding the difference between a tax credit and a tax deduction can significantly impact how much you owe—or get back—at tax time.
At our tax relief company, we break it down so you can make smarter financial decisions.
A tax deduction reduces your taxable income.
For example, if you earned $50,000 and claim a $2,000 deduction, you're only taxed on $48,000.
Common deductions include mortgage interest, medical expenses, and charitable donations.
A tax credit, on the other hand, directly reduces your tax bill.
If you owe $3,000 in taxes and qualify for a $1,000 credit, your bill drops to $2,000.
Some credits are even refundable, meaning you can receive money back even if you owe nothing.
Both are valuable tools, but credits tend to have a bigger impact.
We help clients identify and apply every eligible deduction and credit, ensuring you get the maximum benefit and avoid overpaying the IRS.
Our Tax Relief Resource Center is a free resource for those seeking tax relief. It provides comprehensive guides and resources to help you understand your tax relief options. When you're ready, we'll help you start the tax relief process.