How are tax credits different than tax deductions?
Tuition tax credits help families to spend money on private education services by allowing all or a portion of this expense to be removed from the amount of tax a family must pay to the state government. The tax a family owes is first determined, than the credit reduces a family’s tax burden by the amount of the credit. Unlike a tax credit, a tax deduction reduces the amount of income a family must pay taxes on by the percentage of tax rate rather than the entire dollar amount of the deduction.
