Tax Credits
Dollar-for-dollar credits that reduce your tax bill
What is the American Opportunity Tax Credit?
The American Opportunity Tax Credit gives families up to $2,500 per student for college expenses like tuition, fees, and textbooks. Unlike other education credits, up to $1,000 is refundable, meaning you can get money back even if you owe no taxes. It's available for the first 4 years of college only.
Can I claim both education credits in the same year?
You cannot claim both the American Opportunity Tax Credit and Lifetime Learning Credit for the same student in the same year, but you can claim different credits for different students. For example, claim AOTC for your undergraduate child ($2,500 max) and LLC for your graduate student child ($2,000 max) on the same return.
Can I claim both education credits in the same year?
No, you cannot claim both the American Opportunity Credit and Lifetime Learning Credit for the same student in the same year. However, you can claim different credits for different students — for example, AOTC for your undergraduate child and LLC for yourself in graduate school.
Can I get a tax credit for a heat pump or solar panels?
Yes, you can claim a 30% federal tax credit for solar panels and heat pumps installed through 2032. For solar, there's no cap on the credit amount. Heat pumps qualify for up to $2,000 under the 25C credit (30% of cost, capped at $2,000 per unit).
Can I get a tax credit for a heat pump or solar panels?
Yes, you can claim a 30% federal tax credit for solar panels through 2032, and a 30% credit for heat pumps up to $2,000 annually through 2032. A $20,000 solar installation could save you $6,000 in taxes, while a $10,000 heat pump could save you $2,000.
How does the Child and Dependent Care Credit work?
The Child and Dependent Care Credit gives working parents 20-35% of qualified care expenses back as a tax credit. For 2026, you can claim up to $3,000 in expenses for one dependent or $6,000 for two or more dependents. A family earning $50,000 with $6,000 in daycare costs would get a $1,200 credit.
What is the Energy Efficient Home Improvement Credit?
The Energy Efficient Home Improvement Credit gives you 30% of the cost of qualifying energy-efficient improvements, up to $1,200 per year for most items. Windows and skylights are capped at $600 total, while heat pumps, water heaters, and biomass stoves can qualify for up to $2,000 each per year through 2032.
How do I know if I qualify for the EITC?
You qualify for EITC if you work (or are married to someone who works) and earn under $63,398 with 3+ kids, $59,187 with 2 kids, $53,057 with 1 kid, or $21,560 with no kids (2026 limits). Even higher earners may qualify - a married couple with 2 kids can earn up to $65,610 and still get some credit.
How do I know if I qualify for the EITC?
You qualify for the EITC if your 2026 earned income is below $63,398 (married filing jointly with 3+ kids) and you meet age, filing status, and residency requirements. The credit ranges from $600 to $7,430 depending on income and number of qualifying children.
How does the Child and Dependent Care Credit work?
The Child and Dependent Care Credit reduces your tax bill by 20-35% of qualified care expenses up to $3,000 per child or $6,000 for two or more children. A family spending $8,000 on daycare for two kids can claim up to $1,200-$2,100 in credit depending on income.
How does the Child Tax Credit work for 2026?
For 2026, the Child Tax Credit provides up to $2,000 per qualifying child under 17, with up to $1,700 refundable. The credit phases out for single filers earning over $200,000 and joint filers over $400,000. Unlike deductions, credits reduce your tax bill dollar-for-dollar.
How does the EV tax credit work in 2026?
The federal EV tax credit provides up to $7,500 for new electric vehicles and $4,000 for used EVs in 2026, but eligibility depends on vehicle assembly location, battery sourcing, and income limits. Single filers earning over $150,000 and married couples over $300,000 don't qualify.
How does the Residential Clean Energy Credit work?
The Residential Clean Energy Credit gives you a dollar-for-dollar tax credit equal to 30% of the cost of qualifying clean energy systems installed at your home, including solar panels, wind turbines, geothermal heat pumps, and battery storage. For a $20,000 solar system, that's a $6,000 credit that directly reduces your tax bill.
How does the Residential Clean Energy Credit work?
The Residential Clean Energy Credit provides a 30% tax credit for qualifying clean energy systems installed in your home through 2032. For a $20,000 solar panel system, you'd get a $6,000 credit that directly reduces your tax bill dollar-for-dollar.
How do refundable vs non-refundable credits differ?
Non-refundable credits can only reduce your tax owed to zero — you can't get cash back. Refundable credits give you cash back even if you owe no taxes. The Earned Income Tax Credit (EITC) can provide up to $7,430 in refunds for 2026, while non-refundable credits like the Child Tax Credit can only offset taxes you actually owe.
What is the difference between a tax deduction and a tax credit?
A tax deduction reduces your taxable income, while a tax credit directly reduces your tax owed dollar-for-dollar. Credits are more valuable: a $1,000 credit saves you $1,000, but a $1,000 deduction only saves you $220-$370 depending on your tax bracket.
What is the American Opportunity Tax Credit?
The American Opportunity Tax Credit provides up to $2,500 per student annually for college expenses, with 40% ($1,000) refundable even if you owe no taxes. Families can claim this credit for four years per student, potentially saving $10,000 total per child's education.
What is the Credit for the Elderly or Disabled?
The Credit for the Elderly or Disabled provides up to $1,125 for taxpayers 65+ or permanently disabled with limited income. For 2026, single filers must have adjusted gross income under $17,500 and married couples under $25,000 to qualify for the maximum credit.
What is the Earned Income Tax Credit (EITC)?
The Earned Income Tax Credit (EITC) is a refundable tax credit for low-to-moderate income workers, worth up to $7,430 for families with three or more children in 2026. Unlike deductions, it's fully refundable — you receive money even if you owe no tax. Income limits range from $17,640 (no children) to $63,398 (3+ children, married filing jointly).
What is the Premium Tax Credit for health insurance?
The Premium Tax Credit is a refundable tax credit that reduces your health insurance premiums if you buy through a marketplace and earn 100-400% of the Federal Poverty Level. For 2026, a family of four earning $60,000 could receive up to $8,400 annually in premium assistance.
What is the Adoption Tax Credit?
The Adoption Tax Credit provides up to $16,810 per adopted child (2026) to help offset qualified adoption expenses. The credit is partially refundable, meaning you can receive up to $2,000 even if you owe no taxes. It phases out for families earning over $251,160 annually.
What is the Credit for the Elderly or Disabled?
The Credit for the Elderly or Disabled provides up to $1,125 in tax relief for people 65+ or permanently disabled with income under certain thresholds. For 2026, single filers can qualify with AGI up to $20,000, and married couples up to $32,500.
What is the difference between a tax deduction and a tax credit?
A tax deduction reduces your taxable income (saving you 10-37% of the deduction amount), while a tax credit directly reduces your tax owed dollar-for-dollar. A $1,000 credit saves you $1,000 in taxes, but a $1,000 deduction saves you only $100-$370 depending on your tax bracket.
What is the Energy Efficient Home Improvement Credit?
The Energy Efficient Home Improvement Credit provides up to $3,200 per year (30% of costs) for qualifying home efficiency upgrades like heat pumps, insulation, and Energy Star windows. The credit has a lifetime limit of $1,200 for most improvements and $2,000 for heat pumps.
What is the Foreign Tax Credit?
The Foreign Tax Credit reduces your U.S. taxes dollar-for-dollar for income taxes paid to foreign countries, preventing double taxation. In 2026, Americans paid over $12 billion in foreign taxes that qualified for this credit. You can choose between taking the credit or an itemized deduction.
What is the Lifetime Learning Credit?
The Lifetime Learning Credit provides up to $2,000 per tax return for qualified education expenses. Unlike other education credits, there's no limit on years claimed and it covers graduate school, professional development, and part-time students. You can claim 20% of the first $10,000 in qualified expenses.
What is the Saver's Credit (Retirement Savings Contribution Credit)?
The Saver's Credit gives you 10%, 20%, or 50% of your retirement contributions back as a tax credit, up to $1,000 per person ($2,000 married). You qualify if your 2026 adjusted gross income is under $76,500 (married) or $38,250 (single) and you contribute to a 401(k), IRA, or similar account.
What tax credits am I missing?
Common missed credits include the Earned Income Tax Credit (up to $7,830 for families), Child and Dependent Care Credit (up to $2,100), education credits (up to $2,500), and Retirement Savings Contributions Credit (up to $2,000). Missing just one major credit can cost you $1,000+ in lost refunds.
What tax credits can I claim even with the standard deduction?
You can claim ALL tax credits even with the standard deduction. Credits like the Child Tax Credit ($2,000 per child), Earned Income Tax Credit (up to $7,430), and education credits reduce your taxes dollar-for-dollar after deductions are applied. Unlike deductions, credits are calculated separately and don't compete with the standard deduction.