In the United States
, a tax credit
is a direct deduction from the income tax due. As such it is much more valuable than a deduction
, which is merely a subtraction from the gross amount taxed, the value of which depends on the current tax percentage, now about 33% at top.
"Investment" tax credits have been used in the past as a way of encouraging businesses to put money into new equipment, and hence to stimulate flagging economies. During the recessions of the 1970's and 1980's investment tax credits were an important feature in the tax landscape. A business got a certain amount cut off its taxes for such investments.
This sometimes produced ridiculous results. Since investments in "real estate" did not qualify, and "real estate" was defined as anything "permanently" fixed to a building, there was a surge of purchases of moveable partitions and the like, which, not being bolted down, technically qualified for the tax break.
That so many of us work in flimsy cubicles is a legacy of this era.