Guide to Key Tax Benefits in Form 1040
U.S. individual income tax offers various deductions and credits to reduce your tax burden. Use this tool to intuitively understand the difference and effect of these two types of benefits.
Find Your Standard Deduction
Select your filing status to see the 2024 standard deduction amount.
The standard deduction for your selected filing status is
$14,600
Deduction vs. Credit: Comparing the Tax Savings
Enter your gross income to see the difference between a deduction and a credit.
Note: This is an illustration using simplified tax rates.
Key Types of Tax Benefits
Deductions
These benefits reduce your taxable income. This includes the standard deduction, itemized deductions (SALT, mortgage interest, etc.), IRA contributions, and student loan interest.
Nonrefundable Credits
These directly reduce the tax you owe, but only to zero. You don't get any amount back. Examples include the Child and Dependent Care Credit and education credits.
Refundable Credits
The most powerful benefits. If the credit is more than your tax, you get the difference as a refund. The Earned Income Credit (EIC) and Additional Child Tax Credit (ACTC) are key examples.
Adjustments to Income
These are subtracted from your gross income to calculate your Adjusted Gross Income (AGI). You can take these even if you don't itemize, such as student loan interest.
