Tax Credit (Noun)
Meaning
A direct reduction in tax liability (not dependent on the taxpayer's tax bracket).
Classification
Nouns denoting possession and transfer of possession.
Examples
- The earned income tax credit is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children.
- The tax credit for buying an electric vehicle is a direct reduction in tax liability, which means it reduces the amount of taxes owed dollar for dollar.
- Homebuyers who purchased a home in the past year may be eligible for a mortgage interest tax credit, which can provide significant savings on their tax bill.
- The renewable energy tax credit allows businesses and individuals to claim a tax credit for a portion of the costs associated with installing solar or wind energy systems.
- Low-income families may be eligible for a child tax credit, which can provide a substantial tax credit that can be used to offset taxes owed.