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How does a tax credit differ from a tax deduction in reducing a taxpayer's federal income tax liability?
A
A credit reduces taxable income, while a deduction reduces the tax owed dollar-for-dollar
B
Both reduce the tax owed dollar-for-dollar, but only credits are refundable
C
A credit reduces the tax owed dollar-for-dollar, while a deduction reduces taxable income
D
Both reduce taxable income, but a credit does so at a higher rate