Taxes use simple words that sound technical. One common confusion is between a deduction and a credit — both reduce how much tax you pay, but they do so in different ways. Imagine your tax bill is a pizza. A deduction slices off part of the pizza before the tax is calculated (it reduces the taxable base), while a credit is like a coupon that reduces the final bill after the tax is computed. People often assume a deduction and a credit are interchangeable; in practice, credits typically produce a larger dollar-for-dollar impact when values are similar. Understanding which is which helps you prioritize tax actions: choose the right documentation for an itemized deduction and learn whether a credit is refundable or not (which affects whether you can get money back). This question tests the basic conceptual difference so you’ll spot the bigger savings tool when planning simple choices.