A tax credit is an allowance that reduces the final amount of taxes owed on your federal income tax return. That compares with a tax deduction that reduces your taxable income which then is multiplied by a tax rate to arrive at the tax due. Hence, to many a tax credit is worth three to six times more than a tax deduction in terms of tax dollars saved.
Tax credits are rare but a recent one has allowed tax credit for investing in energy saving technologies such as solar panels. An earlier one allowed credit for investing in coal seam gas recovery.
Related Fool Articles
- [link link title]
Recent Mentions on Fool.com
- You'll Never Guess What Surprising Problem Is Affecting Higher Income Households
- Was There a Silver Lining in General Motors' First Quarter?
- Nearly 3 Out of 5 American Workers Have This Much Saved for Retirement
- American Airlines Group, Inc. Earnings: Another Quarter, Another Record
- Apple Inc. Stock Ratio Analysis
- Netgear Inc. Offers Mixed Results Amid Restructuring