Federal tax credits for individuals

🇺🇸

The U.S. tax code provides tax credits for individuals which serve to reduce the tax a taxpayer is required to pay. Tax credits are generally classified into two basis groups: refundable tax credits and non-refundable tax credits.

Tax credits
Tax credits are often advantageous because they are subtracted, dollar for dollar, from the tax owed. By contrast, a tax deduction reduces the income tax due by the taxpayer's marginal tax rate. Tax credits are often subject to limitations, such as age requirements, or by taxpayer income levels.

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

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

Refundable tax credits
A refundable tax credit is not limited by the amount of an individual's tax liability Thus, a refundable tax credit means you get a refund, even if it is more than what 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 can't reduce the amount of tax owed to less than zero. Thus, a nonrefundable tax credit means you get a refund only up to the amount you owe for taxes.

List of federal tax credits for individuals
The list below provides links to IRS source pages for various federal tax credits. The list is arranged by thematic groupings.

Family & 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))