Tax Credits vs Deductions Explained for 2025 Taxes Simple Overview of the Tax Formula

In this video, I explain the difference between tax credits and tax deductions and how each one affects your tax bill. Before comparing credits and deductions, I give a simple overview of the tax formula so you can see where gross income, adjustments, and deductions fit into the process. This helps you understand how taxable income is calculated and why credits can be more valuable than deductions in many situations.

You will learn how deductions lower taxable income, which then reduces your tax at your marginal rate, while credits reduce your tax dollar for dollar. I also walk through several clear examples so you can see exactly how these rules apply for 2025 taxes.

What you will learn
• A simple overview of the tax formula
• What counts as gross income
• How adjustments reduce AGI
• The role of standard and itemized deductions
• How deductions lower taxable income
• How tax credits directly reduce tax owed
• Examples comparing credit savings and deduction savings

Perfect for students, new taxpayers, and anyone who wants a clear explanation of the difference between credits and deductions.

#tax #taxsimplified #accountingstudent

Chapters

00:00 Introduction
02:15 Basic Tax Formula
11:55 Credit and Deduction Benefit Compared
15:12 Example & Conclusion

About Brian Winrow

Brian Winrow is a tax attorney and educator with extensive experience in taxation, accounting, and business. He holds a J.D., LL.M. in Taxation, DBA, MAcc, and MBA, and is licensed to practice before the U.S. Tax Court. He also maintains active professional certifications in taxation and fraud examination. Brian teaches undergraduate and graduate-level tax and accounting courses and focuses on making complex tax concepts easy to understand. He is the founder of Winrow Tax Services, where he works with individuals and businesses on a wide range of tax matters.

If you're interested in working with Brian or learning more about his tax practice, you can visit Winrow Tax Services at www. winrowtax.com.

Have Questions?

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