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
- The Best Return on Equity in Social Media: Facebook Inc and Yelp Inc
- How Social Security's Most Important Feature Got So Confusing
- Why Tesla's Model 3 Could Fail
- Social Security: 3 Ways Children Can Qualify
- Which Companies Do the Worst at Keeping Your Data Safe?
- How to Save for Retirement if You Don't Have a 401(k)