What's the Difference Between Refundable and Non-Refundable Tax Credits?

Tax credits come in two varieties: refundable and non-refundable, and the difference can have a big impact on what you actually receive. A non-refundable credit can reduce your tax bill to zero, but if the credit is larger than what you owe, you don't receive the excess as a refund — the remaining credit is simply lost. A refundable credit, on the other hand, can bring your tax bill below zero, meaning the IRS will send you a refund check for the portion that exceeds your tax liability. The Earned Income Tax Credit and the Additional Child Tax Credit are two of the most well-known refundable credits. Some credits are partially refundable, meaning only a portion can be paid out as a refund if it exceeds what you owe.