1.3- What is a Non-Refundable Tax Credit?

A nonrefundable credit essentially means that the credit can't be used to increase your tax refund or to create a tax refund when you wouldn't have already had one. In other words, your savings cannot exceed the amount of tax you owe.

A non-refundable tax credit is a type of income tax break that reduces tax liability dollar for dollar. A non-refundable tax credit can only reduce tax liability down to zero. A non-refundable tax credit does not reduce a taxpayer's taxable income; instead, it is net directly against the tax owed.

Examples of nonrefundable tax credits include: Adoption Tax Credit. Foreign Tax Credit. Mortgage Interest Tax Credit.

A non refundable Tax credit can only reduce a Tax Payers Tax Liability to zero.