Which of the following describes the main feature of credits?

The main feature of tax credits is that they reduce the taxpayer's liability rather than the amount of income that is subject to taxation. Unlike deductions, which lower the taxable income and, consequently, the total tax amount owed, credits provide a direct reduction of the tax owed. This means that if you qualify for a credit, it can directly subtract from your total tax bill, leading to a more beneficial impact on your overall tax situation.

For example, if a taxpayer owes $2,000 in taxes and qualifies for a $500 tax credit, their tax liability would be reduced to $1,500. This direct reduction makes tax credits particularly valuable compared to deductions, which only lower the income upon which taxes are calculated.