what is the difference between a tax credit and a tax deduction 
tax credits and tax deductions reduce the amount of tax you owe but they work differently tax credits reduce your tax bill while tax deductions reduce your taxable income say you re eligible for a 1 000 tax credit and a 1 000 tax deduction the tax credit lowers your tax bill by 1 000 while the tax deduction reduces your taxable income the amount of income on which you owe taxes by 1 000 of the two tax credits save you more money 10