Federal tax credits for individuals

🇺🇸

Tax credits for individuals can reduce your tax liability. They fall into two main groups: refundable tax credits, and non-refundable tax credits.

Tax credits
Tax credits are often advantageous because you subtract them, dollar for dollar, from the tax you owe. In contrast, a tax deduction reduces your income tax due by your marginal tax rate. Tax credits often have limitations, such as age requirements, or by taxpayer income levels.

The most common tax credits for investors are the saver's credit that applies (subject to income limitations) if you make contributions to retirement savings plans, and the foreign tax credit, which applies if you hold international securities in taxable accounts.

If you use tax-deferred education savings plans, such as 529 plans and Coverdell Education Savings Accounts, or use U.S. savings bonds for paying college costs, consider coordinating payments with the two education tax credits, the Lifetime Learning Credit and the American Opportunity Tax Credit.

Refundable tax credits
Your tax liability does not limit a refundable tax credit. This means that you get a refund from this tax credit even when it is more than the tax you owe.

Only a few federal individual tax credits are refundable. Refundable credits include the Earned Income Tax Credit, the Premium Tax Credit (Affordable Care Act), the credit for Excess Social Security and RRTA Tax Withheld, and the Child Tax Credit.

The American Opportunity Tax Credit is a partially refundable tax credit (40% of the credit, up to $1,000).

Non-refundable tax credits
The majority of federal individual tax credits are non-refundable. A non-refundable tax credit tax cannot reduce the tax you owe to less than zero. A nonrefundable tax credit means you get a refund only up to the amount you owe for taxes.

Lists of federal tax credits for individuals
The lists below show links to IRS source pages for various federal tax credits.

Family and dependents

 * Earned Income Tax Credit (EITC)
 * Child and Dependent Care Credit
 * Adoption Credit and Adoption Assistance Programs
 * Child Tax Credit
 * Credit for the Elderly or Disabled

Health care

 * Premium Tax Credit (Affordable Care Act)

Income and savings

 * Earned Income Tax Credit
 * Saver's Credit
 * Foreign Tax Credit
 * Excess Social Security and RRTA Tax Withheld
 * Credit for Tax on Undistributed Capital Gain
 * Nonrefundable Credit for Prior Year Minimum Tax
 * Credit to Holders of Tax Credit Bonds

Education

 * Lifetime Learning Credit
 * American Opportunity Tax Credit

Homeowners

 * Low-Income Housing Credit
 * Residential Energy Efficient Property Credit
 * Nonbusiness Energy Property Credit
 * Mortgage Interest Credit

Electric vehicle credit

 * Plug-in Electric Drive Motor Vehicle Credit
 * Plug-in Conversion Credit (Section 30B(i))
 * Alternative Fuel Vehicle Refueling Property Credit (Section 30C)
 * New Qualified Fuel Cell Motor Credit (Section 30B(b))