Question \#11 of 15 A tax deduction is of greater value to an investor than a tax credit. True False

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1. A tax deduction reduces the taxable income. For example, if an investor is in a tax bracket of $$25\%$$, then a deduction of $$\$100$$ reduces the tax liability by $$\$25$$ (i.e., $$25\%$$ of $$\$100$$).

2. A tax credit, on the other hand, directly reduces the tax liability dollar-for-dollar. Thus, a $$\$100$$ tax credit reduces the tax liability by $$\$100$$.

3. Since a tax credit provides a greater reduction in tax liability compared to a tax deduction (assuming both are of the same amount), the statement that "A tax deduction is of greater value to an investor than a tax credit" is $$	extbf{False}$$.
A tax credit is more valuable than a tax deduction.

Question \#11 of 15 A tax deduction is of greater value to an investor than a tax credit. True False

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