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Tax Credit

A direct reduction in the amount of tax owed to the government. For example, a $100 tax credit reduces your tax bill by $100, unlike a deduction which only reduces your taxable income.

Tax Deduction

An amount that can be subtracted from your gross income to reduce your taxable income. For example, a $100 deduction might only reduce your tax bill by $10-$30, depending on your tax bracket.

Internal Revenue Code of 1986

The main body of tax law in the United States, which the IRS enforces. This bill adds a new section to it.

Charitable Contribution

A gift of cash or property made to a qualified tax-exempt organization, generally one that is philanthropic, religious, or educational.

501(c)(3) Organization

A type of non-profit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. These organizations are typically public charities or private foundations.

Private Foundation

A non-profit organization that usually receives its funding from a single source, such as an individual, family, or corporation, rather than from the general public. They have stricter rules than public charities.