Tax Credit Calculator

Common Tax Credits (2024)

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Frequently Asked Questions

What is a tax credit?

A tax credit directly reduces your tax liability dollar-for-dollar. Unlike deductions that reduce taxable income, credits reduce the actual tax you owe. A $1,000 tax credit saves $1,000 in taxes, regardless of your tax bracket. Some credits are refundable, meaning you get the excess back as a refund.

What is the difference between refundable and nonrefundable credits?

Refundable credits can reduce your tax below zero, resulting in a refund of the excess. Nonrefundable credits can only reduce your tax to zero; any excess is lost. The Child Tax Credit is partially refundable (up to $1,600), while the Lifetime Learning Credit is nonrefundable.

What is the Child Tax Credit?

The Child Tax Credit provides up to $2,000 per qualifying child under age 17. Up to $1,600 is refundable (Additional Child Tax Credit). The credit phases out for higher-income taxpayers: $200,000 MAGI for single; $400,000 for married filing jointly.

What is the Earned Income Tax Credit (EITC)?

The EITC is a refundable credit for low-to-moderate-income workers. For 2024, the maximum credit ranges from $632 (no children) to $7,830 (3+ children). Phases in with earned income and phases out at higher incomes. Childless workers age 25-64 also qualify.

What is the American Opportunity Tax Credit?

The AOTC provides up to $2,500 per eligible student for the first four years of higher education. 40% of the credit is refundable. It covers tuition, fees, and course materials. Phases out for single filers with MAGI between $80,000 and $90,000 ($160K-$180K married).

What is the Lifetime Learning Credit?

The LLC provides up to $2,000 per tax return for qualified education expenses. It is available for all years of post-secondary education and courses to acquire or improve job skills. The credit is nonrefundable and phases out for single filers with MAGI between $80,000 and $90,000.

What is the Child and Dependent Care Credit?

This credit helps pay for care of children under 13 or disabled dependents while you work. For 2024, the credit is up to $1,050 (one qualifying person) or $2,100 (two or more) based on qualifying expenses. It is nonrefundable.

What is the Saver's Credit?

The Retirement Savings Contributions Credit (Saver's Credit) provides a credit of 10%, 20%, or 50% of retirement contributions up to $2,000 ($4,000 married filing jointly). The credit rate depends on AGI, phasing out completely at $38,250 ($76,500 married) in 2024.

What is the Residential Energy Credit?

The Energy Efficient Home Improvement Credit provides up to $3,200 for qualifying energy improvements: $2,000 for heat pumps, $600 for windows/doors, $150 for insulation. It is nonrefundable with no dollar limit on lifetime use. Covers 30% of qualifying costs.

What is the EV Tax Credit?

The Clean Vehicle Credit provides up to $7,500 for new qualified plug-in electric vehicles (up to $4,000 for used). Phaseout begins at $150,000 MAGI (single), $300,000 (married). Vehicle price caps apply: $80,000 for SUVs/vans, $55,000 for other vehicles.

What is the Premium Tax Credit?

The Premium Tax Credit helps individuals and families with moderate incomes afford health insurance purchased through the Health Insurance Marketplace. It is refundable and based on a sliding scale. Eligibility ranges from 100% to 400% of the federal poverty level.

What is the Adoption Credit?

The Adoption Credit provides up to $16,810 (2024) for qualified adoption expenses per child. It is nonrefundable but can be carried forward up to five years. The credit phases out for taxpayers with MAGI between $252,150 and $292,150.

What is the Foreign Tax Credit?

The Foreign Tax Credit allows US taxpayers to offset income taxes paid to foreign countries against their US tax liability. It prevents double taxation on foreign-source income. Any excess can be carried back 1 year and forward 10 years.

What credits are available for homeowners?

Homeowners can claim credits for energy-efficient improvements (heat pumps, solar panels, windows/doors), mortgage credit certificates, and first-time homebuyer credits (some states). The Residential Energy Credit and various state-specific credits are available.

What is the Health Coverage Tax Credit?

The HCTC pays 72.5% of qualified health insurance premiums for eligible individuals, including those receiving Trade Adjustment Assistance (TAA) and PBGC pension recipients. It is a refundable credit paid in advance directly to insurers.

How do I claim tax credits?

Tax credits are claimed on your tax return using specific forms. Most education credits use Form 8863, child tax credit uses Schedule 8812, the EITC uses Schedule EIC, and energy credits use Form 5695. Documentation requirements vary by credit.

What is the difference between a tax credit and a tax deduction?

A tax deduction reduces your taxable income before calculating tax. A tax credit reduces your actual tax liability. For example, a $1,000 deduction for someone in the 22% bracket saves $220, while a $1,000 credit saves $1,000. Credits are generally more valuable.

What is the adoption credit?

The Federal Adoption Tax Credit is a nonrefundable credit for qualified adoption expenses including adoption fees, court costs, attorney fees, and travel expenses. For 2024, the maximum credit is $16,810 per child, with income phaseout between $252,150 and $292,150.

What credits are available for low-income taxpayers?

Low-income taxpayers may qualify for the Earned Income Tax Credit, Child Tax Credit, Saver's Credit, Premium Tax Credit, and possibly state-level credits. Free tax preparation services (VITA/TCE) can help eligible taxpayers identify applicable credits.

What is the Work Opportunity Tax Credit?

The WOTC is a federal tax credit for employers who hire individuals from certain target groups facing employment barriers, including veterans, ex-felons, SNAP recipients, SSI recipients, and long-term unemployed. The credit ranges from $1,200 to $9,600 per qualified employee.

What is the Research & Development Tax Credit?

The R&D Tax Credit (Research Credit) provides a credit for qualified research expenses incurred in developing new or improved products, processes, or software. The credit is 20% of qualified research expenses above a base amount or a simplified 14% alternative.

How do tax credits affect my refund?

Refundable credits increase your refund if they exceed your tax liability. Nonrefundable credits can reduce your tax to zero but won't generate a refund on their own. Combining multiple credits can maximize your refund, especially if they include refundable credits.

What is the Disabled Access Credit?

The Disabled Access Credit provides a nonrefundable credit of 50% of eligible expenditures between $250 and $10,250 for small businesses that make their facilities accessible to disabled individuals. Maximum annual credit is $5,000.

What is the Employer-Provided Childcare Credit?

Employers can claim a credit of up to 25% of qualified childcare facility expenditures plus 10% of childcare resource and referral expenditures, up to $150,000 per year. The credit encourages employers to provide childcare benefits to employees.

What is the Plug-In Electric Vehicle Credit for commercial use?

Commercial EV buyers (businesses, governments, taxis) can claim up to $40,000 per vehicle for qualified commercial clean vehicles, including electric trucks, vans, and buses. There's no MSRP cap or income limit for commercial vehicles.

What is the Credit for the Elderly or Disabled?

The Credit for the Elderly or Disabled provides a tax credit for individuals age 65+ or those who retired on permanent disability. The credit ranges from $3,750 to $7,500 depending on filing status. Income and Social Security limits apply.

What is the Premium Tax Credit repayment?

If your actual income exceeds the estimate used for advance Premium Tax Credit payments, you may need to repay some or all of the excess at tax time. Repayment limits range from $350 to $1,650 depending on income and filing status.

What is the Employer Credit for Paid Family Leave?

Employers who provide paid family and medical leave can claim a credit of 12.5% to 25% of wages paid to qualifying employees on leave. Maximum eligible wages are $66,000 per employee per year. The credit is available for 2023-2025.

What credits help with solar panel installation?

The Solar Investment Tax Credit (ITC) provides a 30% federal tax credit for solar panel systems installed on residential or commercial properties. There is no cap on the credit amount. The credit steps down to 26% in 2033 and 22% in 2034 unless renewed.

Can I claim multiple tax credits?

Yes, you can generally claim multiple tax credits on the same return. However, some credits cannot be claimed for the same expenses (e.g., you cannot claim both AOTC and LLC for the same student/same expenses). Each credit has specific qualification criteria.