Non-Refundable vs Refundable Tax Credits: What’s the Difference?

Refundable tax credits and non-refundable tax credits can be confusing. Here’s how they work and how each can help you when you file your tax return.

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Tax credits and deductions are important because they reduce your tax liability. The IRS describes a tax credit as a "dollar-for-dollar" amount that taxpayers claim on their tax returns to reduce the income tax they owe.  When you're eligible for certain tax credits, you can use them to lower your tax bill

However, not all tax credits are created equal. Here's what you need to know.

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Katelyn Washington
Former Tax Writer

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.