Last year, 103,846,000 taxpayers received a tax refund—that’s more than six in ten. One of the biggest factors in receiving a tax refund is whether taxpayers were eligible for tax credits.

A tax credit is a dollar-for-dollar reduction in the amount of tax you owe. This is different from a tax deduction, which only reduces the amount of income subject to tax. As a result, tax credits are generally considered more favorable.

Some tax credits are refundable, meaning a taxpayer may receive money back even if they owe little or no tax. Other credits are nonrefundable or partially refundable, which limits how the credit can be used.

Here’s a look at some of the most common tax credits—and how they can save you money.

Most tax credits are nonrefundable. That means that they can reduce your federal income tax liability to zero, but they generally cannot result in a refund on their own. If the full amount of a nonrefundable credit exceeds the tax owed, the unused portion is typically lost unless the law allows it to be carried forward to a future tax year.

Don’t assume this means that you’re not entitled to a refund when you claim a nonrefundable tax credit. You can still get a refund if you overpaid through withholding—in that case, the refund is a return of your overpayment and not a result of the credit itself. The credit simply reduces how much tax you owe, but a nonrefundable credit can’t reduce your total tax bill (including the amount withhold) below zero.

A good example is the Child Tax Credit (CTC). The CTC helps families with qualifying children reduce their federal income tax bill. For 2025, the credit is worth up to $2,200 per qualifying child, subject to income limits and eligibility requirements. A qualifying child must be under age 17 at the end of the tax year, be claimed as your dependent, and be a child, stepchild, sibling, or other qualifying relative. The child must have lived........

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