To encourage low- to moderate-income workers to save for retirement,a tax credit called the Saver's Credit is available.Which statement about tax credits and tax deductions is true?

Question

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Tax credits are more favorable than tax deductions because they reduce taxes owed on a dollar-for-dollar basis, while tax deductions reduce taxable income. In other words, if you qualify for a $1,000 Saver's Credit, your tax bill will be reduced by $1,000. However, if you take a $1,000 tax deduction, your taxable income will be reduced by $1,000, which may only save you a percentage of that amount depending on your tax bracket.

To Encourage Low- to Moderate-Income Workers to Save for Retirement,a