Do tax credits or tax deductions save me more money?

A tax credit almost always saves more per dollar than a deduction of the same size. A credit reduces your tax bill dollar-for-dollar: a $2,000 credit cuts your tax by $2,000 regardless of your bracket. A deduction only reduces your taxable income, so a $2,000 deduction saves you your marginal rate times $2,000, just $440 in the 22% bracket or $740 at 37%. That's why credits like the Child Tax Credit, education credits, and the Saver's Credit are so valuable. Credits also come in two flavors: refundable ones (like the Earned Income Tax Credit) can pay you beyond zero tax, while nonrefundable ones can only reduce your tax to zero. When planning, chase credits first, then deductions. To see which apply to your situation, explore wealthserene.com/goals/reduce-taxes.