Tax Credit
Also called: tax credits, credit against tax
A tax credit reduces your tax bill dollar for dollar, which makes it worth far more than a deduction of the same size. A $2,000 credit saves $2,000 regardless of your bracket, while a $2,000 deduction saves a few hundred. Credits are the policy instrument of choice for targeted goals — children, education, energy efficiency, low-income work — precisely because their value doesn't scale with income.