Tax Credit vs Tax Deduction

What Is a Tax Credit?

What Is a Tax Deduction?

What Is the Difference Between Tax Credit and Tax Deduction?

 

Follow the table mentioned below to learn about the difference regarding tax credit versus deduction,

Tax Credit

Tax Deduction

It decreases the actual amount of tax an individual owes to the Government.

It decreases the income on which tax amount is computed.

It is applicable after the deductions are made.

It is available before the imposition of tax credit.

Though both tax credit and deduction reduce tax liability, the above-mentioned difference between deduction and credit compels individuals to think about the superiority between the two. So, let’s find out!

Which Is Better Between Tax Credit and Tax Deduction?

Frequently Asked Questions