Tax credit
An amount subtracted directly from the tax you owe, so a $1,000 credit lowers your tax by $1,000.
A tax credit is applied after your tax is figured from the brackets. That makes it worth its full amount, unlike a deduction, which is only worth the deduction times your tax rate.
Some credits are nonrefundable, so they can only lower your tax to zero. Others are refundable, so any part left over is paid to you as a refund.
Example
With a $3,220 tax bill, a $1,000 credit leaves $3,220 − $1,000 = $2,220 to pay. A $1,000 deduction in the 12% bracket would save only $120.