Tax Credit vs. Tax Deduction
A tax deduction lowers the income you're taxed on; a tax credit lowers your tax bill dollar-for-dollar. A $1,000 credit saves you $1,000, while a $1,000 deduction saves only your marginal rate times $1,000 — so credits are almost always more valuable.
The difference is worth putting in dollars. A $1,000 credit reduces your tax bill by $1,000, whoever you are. A $1,000 deduction reduces your taxable income by $1,000, so it saves you your marginal rate — $220 in the 22% bracket, $370 in the 37% bracket, and nothing at all if you take the standard deduction and this expense was going to be itemized. Credits are therefore worth several times more per dollar, and they are worth the same to everyone, while a deduction's value rises with income. Some credits are refundable and can pay you even when you owe no tax; others only reduce the bill to zero.