what is a nonrefundable tax credit 
a nonrefundable tax credit is a reduction in the amount of income taxes that a taxpayer owes it can reduce the amount owed to zero but no further in other words the taxpayer forfeits any credit that exceeds the total amount of taxes owed by contrast a refundable tax credit results in a refund from the internal revenue service irs if the credit reduces the taxpayer s liability to a number below zero refundable and nonrefundable tax credits are both directly subtracted from the amount of taxes that a taxpayer owes tax deductions on the other hand are subtracted from the taxpayer s taxable income tax credits generally result in bigger savings especially for lower income filers 