If the number of federal tax credits is not enough to think about, there are also state and local tax credits to consider. While credit amounts and eligibility vary by state, this overview can give you something to consider — or to discuss with an accountant.
State Earned Income Tax Credits – Similar to the federal EITC, refundable credits are available for earned income and offered in 21 states — including New York, Illinois, Colorado and Minnesota — in addition to Washington, D.C. Nonrefundable EITCs are offered in Virginia, Ohio, Delaware and Maine. Eligibility varies by state, so check with your state government website or tax accountant for more information.
New York City also offers its own refundable EITC. If you're a married couple with children and you earn less than $52,000, you can qualify for a credit of more than $8,000 [source: New York City Department of Consumer Affairs].
Homebuyer credits – Designed to encourage homeownership and stabilize the real estate market, homebuyer credits can help lower the cost of buying a house. One federal tax credit offered first-time homebuyers up to 10 percent of the purchase price of a home purchased between April 2008 and May 2010. That credit has since expired, but many states still offer credits and other assistance programs to encourage would-be buyers. Homeownership.org can help you find programs in your state.
Energy tax credits – Depending on your state or region, local government agencies and utility companies might offer valuable credits when you invest in energy efficiency. Energy.gov lets you search for the programs offered in your state.