Tax season is upon us. For some, it may be your first time filing. And even for those who have filed for years, taxes are not the easiest task to tackle.

From credits to deductions, tax terminology can be confusing. So, here's what you should know about tax credits, what they are, how they work, and what makes them different from deductions:

What is a federal tax credit?

Broadly speaking, a tax credit is the dollar-for-dollar amount of money that taxpayers subtract directly from the income taxes they owe. There are different types of tax credits, including:

• Nonrefundable.

• Refundable.

• Partially refundable.

Both federal and state governments give tax credits, such as the Child Tax Credit or Lifetime Learning Credit, in order to sustain and benefit the economy. A federal tax credit is granted by the federal government.

Your tax refund check just arrived. What should you do with it?

Tax credit vs. tax deduction

While they may appear similar, tax credits and tax deductions are two separate things.

A tax credit refers to the specific amount taken away from what a person owes. For example, if you receive a tax credit of $2,000 on a $4,500 tax bill, it would be reduced to $2,500.

On the other hand, a tax deduction reduces the amount of your income that is taxed. For example, let's say you have a taxable income of $60,000 and you receive $10,000 in deductions. This would reduce your taxable income to $50,000.

The main difference is tax credits impact the total tax, while deductions only affect the amount of your income that is subject to tax.

Are you missing important tax dates? Here are tax milestone birthdays to know.

More of your 2023 tax season questions answered

• Tax season guide for new parents: What to know about the Child Tax Credit, EITC and more

• What is OASDI tax on my paycheck? Here's why you and your employer pay this federal tax

• Do you have to report crypto on taxes? Yes. Here's what you should know about form 8949

• What is a 1098-E form? What you need to know about the student loan interest statement

• Tax season: What exactly is the mileage rate? There's more than one.

• Is it better to pay someone to do your taxes or do them yourself? We'll help you decide.

• What is income tax? What to know about how it works, different types and more

• Is Social Security income taxable by the IRS? Here's what you might owe on your benefits

• Who has to file a tax return:  It's not necessary for everyone. Here are the rules.

• What is FICA? How much you contribute to federal payroll taxes.

• How much is the Child Tax Credit? Here's what you need to know about qualifying.

This article originally appeared on USA TODAY: What is a federal tax credit? Understanding how this deduction works