Assumes families claim standard deduction and the renters tax credit. Measured as a percent of 2000 poverty guidelines. Seniors are another group that is likely to suffer from high electricity costs, but receive little benefit from tax incentives for conservation. Moreover, the state does not tax Social Security income. Credits Versus Deductions Tax credits reduce the amount of taxes that would otherwise be owed on a dollar for dollar basis.
Deductions reduce the amount of income that is subject to tax.
While credits are worth the same to taxpayers at all income levels as long as they have sufficient income to have a tax liability deductions are worth more to high-income taxpayers. The value of a deduction increases with the marginal rate of a taxpayer. A deduction is worth three times more to a family subject to the state s 6 percent tax rate than it is to a family at the 2 percent rate. To the extent the committee considers incentives, credits provide the same benefit to all taxpayers with sufficient incomes to claim the incentive. Refundable credits provide assistance to families with incomes too low to claim traditional credits.