• A tax credit is the amount of money that taxpayers can deduct, dollar by dollar, from their income taxes.
  • Tax credits are more favorable than tax deductions because they reduce the tax payable, not just the amount of taxable income.
  • There are three main types of tax credits: non-refundable, refundable and partially refundable.
  • A non-refundable tax credit can reduce the amount of tax you owe to zero, but it cannot provide you with a tax refund.