Tax Credit


DEFINITION of 'Tax Credit'

An amount of money that a taxpayer is able to subtract from the amount of tax that they owe to the government. The value of a tax credit depends on what the credit is being provided for, and certain types of tax credits are granted to individuals or businesses in specific locations, classifications or industries.


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Unlike deductions and exemptions, which reduce the amount of your income that is taxable, tax credits reduce the actual amount of tax owed. Governments may grant a tax credit to promote a specific behavior, such as replacing older appliances with more efficient ones, or to help disadvantaged taxpayers by reducing the total cost of housing.

  1. Deferred Tax Asset

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  2. Tax Relief

    Any program or incentive that reduces the amount of tax owed ...
  3. Tax Free

    Tax free refers to certain types of goods and/or financial products ...
  4. Business Tax Credits

    A number of federal income tax credits available to businesses ...
  5. General Business Tax Credit

    The total value of all the individual credits to be applied against ...
  6. Earned Income Credit - EIC

    A tax credit in the United States which benefits certain taxpayers ...
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  1. 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 >>
  2. Are Roth IRAs tax deductible?

    Contributions made to a Roth IRA are not tax deductible, although you may be able to take a tax credit, depending on your ... Read Full Answer >>
  3. Are there special benefits for U.S. armed forces personnel?

    If you are a member of the military, you may be afforded special tax benefits that might not be available to other taxpayers. ... Read Full Answer >>
  4. How do I get credit for my retirement plan contributions?

    There is an added incentive for adding to your retirement nest egg, if your income falls within certain limits. Under this ... Read Full Answer >>
  5. How can I use a child tax credit?

    You may be able to reduce the amount of taxes you owe by up to $4,000, by claiming the child tax credit of up to $1,000 ... Read Full Answer >>
  6. How can I tell if I'm eligible for an EITC?

    According to the IRS, over 22 million taxpayers received $41.4 billion dollars in earned income tax credit (EITC) for tax ... Read Full Answer >>

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