Tax Credits vs. Tax Deductions — What Saves You More Money?

When tax season arrives, most people only focus on one thing: how to get the biggest refund possible. But understanding the difference between tax credits and tax deductions can have a major impact on how much you save.

Tax deductions reduce your taxable income.

Tax credits reduce your tax directly, dollar-for-dollar.

Popular credits include:



• Child Tax Credit
• Earned Income Credit
• American Opportunity Credit
• Lifetime Learning Credit
• Premium Tax Credit
• Child & Dependent Care Credit
• Saver’s Credit