It is important to understand the difference between these two terms to accurately estimate your savings. A tax deduction lowers your overall taxable income for the year, meaning you only save a percentage based on your current tax bracket.
In contrast, an EV tax credit is much more valuable because it reduces your final tax liability dollar-for-dollar. This means that if you owe a certain amount in taxes to the government, a credit will directly subtract from that total balance, leaving more money in your pocket.
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