What "tax credit" means in finance

A tax credit is a reduction in the amount of tax owed by an individual or a business. It is a dollar-for-dollar reduction in the amount of taxes owed to the government, which is often given as an incentive for certain behaviors, such as investing in renewable energy or hiring certain types of employees. Tax credits can be refundable or non-refundable, meaning they can either reduce the amount of tax owed or result in a refund if the credit exceeds the amount of taxes owed.