tax credit

Meanings

1. 1nouncountable

   An amount of money that can be subtracted from the tax you owe, reducing your tax bill.

   Grammar: Countable noun: a tax credit, tax credits. Often used with 'claim', 'get', 'receive', or 'qualify for'.

   Patterns

   • claim a tax credit
   • qualify for a tax credit
   • receive a tax credit
   • tax credit for something

   Low-income families can claim a tax credit to reduce their tax bill.

   The government introduced a new tax credit for first-time homebuyers.

   She received a $500 tax credit after installing solar panels.

2. 2nouncountable

   A government policy that gives money back to people who meet certain conditions, often to encourage behavior or support those in need.

   Grammar: Often used in the plural when referring to a system: tax credits.

   Patterns

   • tax credit system
   • reform tax credits
   • cut tax credits

   The tax credit system helps working families with low incomes.

   Some politicians want to cut tax credits to reduce government spending.

Word forms

Common combinations

claim a tax credit

You can claim a tax credit for childcare expenses.

qualify for a tax credit

If your income is below a certain level, you may qualify for a tax credit.

tax credit for

There is a tax credit for buying an electric car.

refundable tax credit

A refundable tax credit can give you money back even if you owe no tax.

earned income tax credit

The earned income tax credit helps low-wage workers.

Synonyms and how they differ

tax deduction

A deduction reduces taxable income, while a credit reduces the tax itself; a credit is usually more valuable.

tax allowance

Chiefly British; an amount of income on which you do not pay tax, similar but not identical to a credit.

Word family

tax noun

Money paid to the government.

credit noun

An amount subtracted from what you owe.

taxable adjective

Subject to tax.

Commonly confused: tax credit or tax deduction?

Practice

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