Which of the following statements regarding tax credits is true?

Question

Quizplus · Accepted Answer

Tax credits directly reduce the amount of taxes payable by the taxpayer. For example, a $1,000 tax credit would reduce the taxpayer's taxes payable by $1,000. Tax credits do not directly reduce taxable income. The benefit of tax credits may be greater for taxpayers with higher marginal tax rates because the reduction in taxes payable is a dollar-for-dollar reduction, meaning it is based on the amount of taxes owed. Therefore, taxpayers who owe more in taxes will receive a greater benefit from tax credits.

Which of the Following Statements Regarding Tax Credits Is True