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Definition: Tax credits are credits that reduce a person's tax liability by an amount equal to the tax credit.
Advice: Tax credits are great because they reduce your tax liability by an amount equal to the tax credit. This differs from a tax deduction, which just reduces your taxable income. Here's an example:
Tax deduction = $1000
Tax credit = $1000
Tax Deduction = $1,000 * 25% = $250 in tax savings
Tax credit = $1,000 = $1,000 in tax savings
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