For a corporate taxpayer in the 21% marginal tax bracket, a $20,000 tax credit is equivalent to a $95,238 tax deduction.

Question

Quizplus · Accepted Answer

This is true because a tax credit directly reduces the amount of tax owed by the taxpayer, while a tax deduction reduces the taxpayer's taxable income subject to their marginal tax rate. Therefore, a $20,000 tax credit is more beneficial than a $95,238 tax deduction for a corporate taxpayer in the 21% marginal tax bracket.

For a Corporate Taxpayer in the 21% Marginal Tax Bracket