Basically, a Tax Credit is worth more that a Tax Deduction
- A tax credit lowers your tax bill dollar for dollar.
- A deduction shaves money off your taxable income, so the value depends on your tax bracket. So, how much you get back with a deduction, depends on your tax bill.
DEDUCTION _-If you’re in the 25% bracket, a $1,000 deduction lowers your tax bill by $250.
CREDIT – But a $1,000 credit lowers the bill by the full $1,000, no matter in which bracket you are.