Are tax credits and tax deductions the same thing?
A tax credit is considered a reduction in what the taxpayer owes. This means that an individual that owes $10,000 in taxes and receives an $8,000 credit would owe $2,000 at tax time. Tax deductions are “deducted” from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes.
