03/04/2026
๐ก Tax Tip: Understanding Deductions vs. Credits
Many taxpayers hear these terms every year but arenโt sure what the difference is. Knowing how they work can help you understand how your refund or balance is calculated.
โ Tax Deductions lower your taxable income.
This means the IRS taxes you on a smaller amount of income.
Example:
If you earn $50,000 and claim $5,000 in deductions, youโre only taxed on $45,000.
Common deductions include:
โข Mortgage Interest
โข Student Loan Interest
โข Charitable Donations
โ Tax Credits reduce the actual amount of tax you owe โ dollar for dollar.
Example:
If you owe $3,000 in taxes and receive a $1,000 credit, you now only owe $2,000.
Popular credits include:
โข Child Tax Credit
โข Earned Income Credit
โข Education Credits
โญ In many cases, credits save you more because they reduce your tax bill directly.
If youโre not sure which deductions or credits you qualify for, weโre here to help make sure you receive every benefit you deserve.
๐ Office: (210) 444-9003
๐ฑ Cell: (210) 730-8002
Grace & Victory LLC Tax and Notary
Your trusted partner in Tax and Notary Services.