Tax deductions and credits are two key tools that can lower your overall tax obligation. Deductions reduce your taxable income, which in turn can lower your tax bracket and the amount of tax you owe. Common deductions include RRSP contributions, child care expenses, and employment expenses, among others. Credits, on the other hand, reduce your tax payable directly and can be non-refundable or refundable. Examples include the Canada Child Benefit, GST/HST credit, and credits for charitable donations. While deductions work by reducing the income you’re taxed on, credits reduce your tax bill dollar for dollar.