Tax CREDITS are usually smaller, but available to ALL, and subtracted from their tax bill whether they itemize deductions or not.
Tax DEDUCTIONS can sound higher, but they only save your percentage of Federal tax paid and are only available to those who itemize deductions. Higher income people itemize more often. Low income people most often don't have enough deductions to be higher than the standard deductions. The more income you have, the higher your tax rate, so the more a deduction is worth to you.
So a $500 child care tax CREDIT would be $500 subtracted from their tax bill for anyone who pays for child care.
A child care tax deduction would allow a multi-millionaire to deduct the thousands they pay for a live-in nanny. Since the poor don't make enough to itemize they get zip.
And a middle class person who itemizes and deducts $5000 at a 17% tax rate saves $700 on their tax bill. A wealthy person who itemizes and deducts the same $5000 at a 34% tax rate saves $1400 on their tax bill. So if you are really rich and spend $50,000 for child care, you would be able to subtract 14,000 from your tax bill.
That is the catch.
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