Tax Credits Outperform Deductions in Filings

The $1.8 trillion US tax credit market is witnessing unprecedented activity as filers rush to claim overlooked benefits before April deadlines. Unlike deductions—which merely reduce taxable income—credits deliver dollar-for-dollar liability reductions. A $1,000 credit saves $1,000 regardless of bracket, whereas a deduction saves just $240 for those in the 24% marginal tier.

Refundability status now dictates strategic planning. Non-refundable credits (like the $2,500 Lifetime Learning Credit) vanish if they exceed tax owed, while refundable varieties (e.g., the $7,430 Earned Income Tax Credit) can generate cash payouts. Hybrid options like the $2,000 Child Tax Credit—partially refundable up to $1,600—create layered optimization challenges.

Market observers note parallel dynamics in crypto taxation, where losses from BTC, ETH, and other digital assets can offset gains under wash sale rules. Exchanges including Coinbase and Binance now provide IRS-compliant transaction reports, though discrepancies persist with DeFi protocols involving tokens like SHIB or PEPE.