Reduction vs. Deduction

It’s tax time – and there’s a big difference between a tax REDUCTION and a tax DEDUCTION...

Tax deductions are great – but tax REDUCTIONS are even better. The reductions – or credits – are a dollar for dollar refund – regardless of your tax bracket. A $1,000 credit is $1,000 more for you. Tax deductions are calculated differently. The deduction reduces your adjusted gross income – and is calculated by the tax bracket you’re in. If you’re in the 10% bracket – a $1,000 deduction means you’ll pay $100 less tax that year – a 25% bracket would be $250 less you’ll owe.