Tax Credit
A tax credit is a form of tax relief that reduces the amount of tax owed by an individual or business. Tax credits are typically offered by governments to incentivize certain activities, such as research and development, or to provide relief to those with lower incomes. Tax credits are generally more beneficial than deductions, as they reduce the amount of tax owed dollar-for-dollar, rather than reducing the amount of income subject to taxation.
History of Tax Credits
Tax credits have been used for centuries to incentivize certain activities or to provide relief to those with lower incomes. The first recorded use of a tax credit was in the United Kingdom in 1799, when the government offered a tax credit to those who purchased certain types of bonds. Since then, tax credits have been used in many countries to incentivize activities such as research and development, or to provide relief to those with lower incomes.
Comparison of Tax Credits
| Type of Tax Credit | Amount |
|---|---|
| Research and Development | Up to 20% of eligible expenses |
| Child Tax Credit | Up to $2,000 per qualifying child |
| Earned Income Tax Credit | Up to $6,660 for qualifying families |
Summary
Tax credits are a form of tax relief that reduce the amount of tax owed by an individual or business. Tax credits have been used for centuries to incentivize certain activities or to provide relief to those with lower incomes. For more information on tax credits, visit the Internal Revenue Service website or consult a tax professional.
See Also
- Tax Deduction
- Tax Exemption
- Tax Rate
- Tax Refund
- Tax Evasion
- Tax Avoidance
- Tax Liability
- Taxable Income
- Taxable Property
- Taxable Event
