Tax deductions
A deduction generally reduces an amount of income that is subject to tax, subject to the applicable rules, limits and eligibility requirements.
Tax credits
A credit generally reduces calculated tax liability. Some systems distinguish between refundable and nonrefundable credits, and rules can vary significantly.
Why a dollar is not always a dollar
A one-unit deduction and a one-unit credit generally do not have the same effect because a deduction changes taxable income while a credit can apply against tax calculated under the relevant rules.
Eligibility matters
Whether a deduction or credit is available can depend on income, filing status, expenses, dependents, activity, location and tax year. Always check current official rules.
Continue learning in the Taxes Center or use the Percentage Calculator for general percentage calculations.
General educational information only; not tax or filing advice.