What are Tax Credits and How Do They Differ from Deductions?
Tax credits are more beneficial than deductions as they reduce tax liability dollar-for-dollar, whereas deductions only reduce taxable income. Common business tax credits include: - Research and Development (R&D) Credit: For expenses related to research activities. - Work Opportunity Credit: For hiring individuals from certain target groups. - Energy Efficiency Credits: For investments in renewable energy and energy-efficient property.