Episode 1290
In this episode, we dive deep into the mechanism of tax credits, a powerful fiscal tool that allows taxpayers to subtract accrued credits directly from the total amount they owe the state. Unlike a deduction, a tax credit functions effectively as a government "discount" or rebate on your final tax bill.
Join us as we break down the complex landscape of global tax incentives:
• The Big Distinction: We explain the critical difference between refundable credits, which can result in the government paying you the difference if the credit exceeds your tax liability, and non-refundable credits, which can reduce your tax bill to zero but offer no cash back beyond that.
• Individual Relief: We explore how different nations support citizens, from the U.S. Earned Income Credit and Child Tax Credit to Canada’s wide array of benefits including the Canada Child Benefit and credits for caregivers and medical expenses. We also discuss the United Kingdom’s "Tax Credits" system, a form of means-tested support that concluded in April 2025.
• Driving Public Policy: Discover how governments use business credits to encourage specific economic behaviors without direct spending. We cover major U.S. incentives like the Investment Tax Credit (ITC) for solar and renewable energy, the Low Income Housing Tax Credit (LIHTC), and credits for rehabilitating historic buildings.
• Corporate Strategies: Learn about the Research & Development (R&D) Tax Credit designed to offset costs for innovation and the Work Opportunity Tax Credit (WOTC) which incentivizes hiring individuals from groups facing high unemployment rates.
Published on 1 day, 2 hours ago
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