Tax credit vs deduction: which saves more?
A deduction lowers the income you’re taxed on. A credit lowers the tax itself, dollar for dollar. A $1,000 credit is usually worth much more than a $1,000 deduction.
$1,000 deduction vs $1,000 credit
Ali is in the 12% bracket.
Credits and deductions people often miss
Child tax credit
Up to $2,200 per qualifying child for 2026, with part of it refundable for many families.
Earned income tax credit (EITC)
A refundable credit for low and moderate-income workers. It can mean money back even if you owe no tax.
NY child & dependent care credit
New York’s new refundable credit for child care costs, starting in 2026.
Tips & overtime deductions
For 2025 through 2028, qualified tips (up to $25,000) and overtime pay (up to $12,500, or $25,000 joint) can be deducted, with income limits.
Senior deduction
Up to $6,000 extra for people 65 and older from 2025 through 2028, reduced at higher incomes.
Education credits
Help with college tuition for you or your children.
Sources: IRS: Child Tax Credit · IRS: Earned Income Tax Credit · IRS: Working Families Tax Cuts (tips, overtime, seniors) · Bowers CPA: NY 2026–27 budget tax changes
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Frequently asked
What is a refundable credit?
A refundable credit can give you money back even if it’s more than your tax. A nonrefundable credit can only bring your tax down to zero.
How do I know which credits I qualify for?
That’s a big part of what our CPA checks in your free consultation.
Sources: IRS: Child Tax Credit · IRS: Earned Income Tax Credit · IRS: Working Families Tax Cuts (tips, overtime, seniors) · Bowers CPA: NY 2026–27 budget tax changes
Figures and rules on this page come from the official and published sources linked above, as of November 2026. People and numbers in the examples are made up to explain the idea. This page is general information, not tax or legal advice for your situation, and laws change; check the linked source or ask a licensed CPA before you act.
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