Tax Credit vs Deduction
A deduction lowers taxable income; a credit lowers your tax bill directly — credits are usually worth more.
A deduction reduces the income you're taxed on, so its value depends on your bracket: a $1,000 deduction saves $220 for someone in the 22% bracket. A credit reduces your tax dollar-for-dollar: a $1,000 credit saves $1,000 regardless of bracket. That's why credits are generally more valuable than deductions of the same size.
Some credits are refundable (they can produce a refund beyond what you owed); others are non-refundable (they can only zero out your tax). Knowing the difference helps you understand which tax benefits move the needle most — and why advice often prioritizes capturing credits.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.