Which statement is correct?
A)Tax credits reduce tax liability on a dollar-for-dollar basis.
B)Tax deductions reduce tax liability on a dollar-for-dollar basis.
C)The benefit of a tax credit depends on the taxpayer's marginal tax rate.
D)Tax deductions are less valuable for high-income taxpayers than for low-income taxpayers.

Question

Quizplus · Accepted Answer

Tax credits directly reduce the amount of tax owed on a dollar-for-dollar basis. For example, a $1,000 tax credit reduces the tax liability by $1,000.

Which Statement Is Correct