A tax credit has a full dollar effect in lowering taxes.

Name: A tax credit has a full dollar effect in lowering taxes.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A tax credit directly reduces the amount of taxes owed by the full amount of the credit. For example, a $1,000 tax credit reduces taxes owed by $1,000. This is different from a tax deduction, which reduces taxable income and results in a lower tax bill based on the taxpayer's marginal tax rate.

A Tax Credit Has a Full Dollar Effect in Lowering