Today on the Finance Flash Go! podcast, we’re going to discuss tax credits.

Now let’s chat about tax credits.

Tax credits are different from tax deductions in that the full amount of a tax credit is deducted from the amount of taxes that you owe in a given year.

For instance, if you have a $5000 tax credit, that means that you pay $5000 less in taxes that year.

In contrast, a $5000 tax deduction will save you an amount equal to $5000 multiplied by your margial tax rate.

So, a tax credit is more valuable than a tax deduction.

An example of a tax credit is the child tax credit.

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