Non-Refundable Tax Credit


DEFINITION of 'Non-Refundable Tax Credit'

A tax credit that can't reduce the amount of tax owed to less than zero. If the credit were able to reduce the amount of tax owed to less than zero, the taxpayer would be entitled to a payment from the government.

Also referred to as a "wastable tax credit."


Loading the player...

BREAKING DOWN 'Non-Refundable Tax Credit'

A tax credit is applied to the amount of tax owed by the taxpayer after all deductions are made from his or her taxable income. For example, before credits, if the tax owed to the IRS is $500 and the taxpayer has a tax credit of $200, the total amount owed is $300. If the taxpayer has total non-refundable credits of $600, his or her tax bill will be $0 ($500 tax bill - $600 in non-refundable tax credits). An example of a non-refundable tax credit is the saver's tax credit, which is available to taxpayers who make contributions to retirement savings plans.

  1. Form 8396: Mortgage Interest Credit

    A tax form distributed by the Internal Revenue Service (IRS) ...
  2. Business Tax Credits

    A number of federal income tax credits available to businesses ...
  3. Work Opportunity Tax Credit

    A separate, nonrefundable credit that is part of the general ...
  4. General Business Tax Credit

    The total value of all the individual credits to be applied against ...
  5. Alternative Motor Vehicle Credit

    A tax credit given to individuals who purchase vehicles that ...
  6. Alternative Fuels Tax Credit

    A non-refundable tax credit awarded to taxpayers who use non-alcohol ...
Related Articles
  1. Savings

    Saver's Tax Credit: A Retirement Savings Incentive

    Here's another reason to put money toward your retirement nest egg.
  2. Taxes

    Tax Deductions Vs. Tax Credits

    Understanding the difference between tax deductions and credits is crucial, as the tax strategies that you adopt now can favor one over the other and yield substantially different tax savings.
  3. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  4. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  5. Taxes

    How to Pay Minimal Taxes on Retirement Assets

    Withdrawing and spending during retirement can be complicated. Here are some tips on how to manage the process in the most tax-efficient manner.
  6. Markets

    Hillary Clinton Promises Free College and Higher Wages

    With income inequality on the rise, Hillary Clinton is running on raising the minimum wage, raising middle class wages, and providing free or low-cost college education.
  7. Retirement

    4 Unusual Ways to Boost Social Security Benefits

    Working the system to get the highest legal Social Security benefits just got harder. Two long-time benefits strategies expired with the 2015 budget bill.
  8. Taxes

    Why Delaware is the Most Business-Friendly State

    Incorporating your company in Delaware may give you the logistical, structural and judicial leg up you need to help your firm's chances of success.
  9. Home & Auto

    Special Benefits for First-Time Homebuyers

    To encourage Americans to buy their first homes, the government offers credits and tax breaks. Even better, you may not need to be an actual first-timer.
  10. Investing

    Carried Interest: A Loophole in America’s Tax Code

    With income inequality becoming an increasingly apparent problem in the U.S., it is time to start removing tax loopholes like carried interest.
  1. How do I sign up for the saver's tax credit?

    The saver's tax credit is a non-refundable tax credit available to eligible taxpayers in the U.S. who make contributions ... Read Full Answer >>
  2. Are personal loans tax deductible?

    Interest paid on personal loans is not tax deductible. If you take out a loan to buy a car for personal use or to cover other ... Read Full Answer >>
  3. Are tax shelters legal in Canada?

    Most tax shelters are legal in Canada. However, there have been illegal tax shelter scams that the Canada Revenue Agency ... Read Full Answer >>
  4. How much does a dependent reduce your taxes?

    Each qualified dependent that you claim on your federal income tax form can reduce your taxable income by $3,950, as of 2 ... Read Full Answer >>
  5. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at, and Determining ... Read Full Answer >>
  6. Can I get a tax credit from conducting research and development?

    It is possible for a company to qualify for a research and development tax credit for conducting research and development. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  2. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  3. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  4. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  5. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
  6. Discount Bond

    A bond that is issued for less than its par (or face) value, or a bond currently trading for less than its par value in the ...
Trading Center