Tax Credit

Tax Credit is defined as the dollar-for-dollar reduction in the tax. Can be deducted directly from taxes owed.

Tax Credit Explained

The tax credit is an amount that a taxpayer who meets certain criteria can subtract from the tax owed. It reduces the taxes owed.

Examples include a credit for earned income below a certain limit and for qualified postsecondary school expenses.

Tax – Tax Credit = Taxes Owed; $1000 – $250 = $750