Tax credits reduce the amount of tax a business owes dollar-for-dollar. For example, if a business owes $10,000 in taxes and receives a $2,000 tax credit, it would only need to pay $8,000. Some tax credits are refundable, meaning if the credit exceeds the tax owed, the business can receive the difference as a refund. Others are non-refundable, meaning they can only reduce the tax owed to zero, but any excess credit cannot be refunded.