Finance

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If I have $40,000 of pre-tax what are the differences between $1,000 tax credit versus a $1,000 tax deduction for a single taxpayer in the 25% tax bracket?

  • Finance -

    a tax credit reduces your taxes by $1000

    a tax deduction reduces your income by $1000. Since you are in the 25% bracket, that reduces your taxes by only $250.

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