Financial Accounting II
Tax credits are amounts that taxpayers can subtract directly from the taxes they owe to the government, reducing their overall tax liability. They differ from tax deductions, which lower the taxable income instead of directly reducing the tax owed. Tax credits can be either nonrefundable, where the credit reduces the tax liability only to zero, or refundable, where any excess credit is paid back to the taxpayer, making them a valuable tool for both individuals and businesses to manage their tax obligations.
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