What is tax credit??

Im a high school student and Ive heard this term used when when people talk about health care reform but I dont know what it means.

What is tax credit??

A tax credit directly lowers your tax bill while a tax deduction lowers your taxable income. IE you have a tax bill of 1000.00. A 200.00 credit reduces your tax bill to 800.00. A 200 deduction reduces your income so if you are in 25% tax bracket 200.00 times 25% is a reduction of your taxes by 50.00 so you would have a bill of 950.00.

What is tax credit??

A tax credit is deducted from your gross income which lowers your the tax your will need to pay.