Which of the following is used to reduce the amount of tax due?

The correct answer is tax credits because they directly reduce the amount of money a taxpayer owes to the government, effectively lowering their tax liability. When a taxpayer qualifies for a tax credit, it is subtracted from their total tax owed dollar-for-dollar, meaning if you owe $1,000 in taxes and have a $200 tax credit, your tax payment would only be $800.

Tax deductions, on the other hand, reduce the amount of taxable income, which can lower the overall tax bill, but not as directly or effectively as tax credits. Tax liabilities refer to the total amount of taxes owed by an individual or entity and do not actively reduce the amount owed; they represent the result of applying other elements such as deductions or credits. Tax rates influence how much tax is owed based on income levels and do not function to reduce taxes due. Tax credits are thus a more effective means of reducing tax obligations than the other options listed.