Income taxes can be confusing and the concept of the tax credit can be a challenge.
But tax credits are not that difficult once you understand some of the terminology.
Tax Credit Amount vs. The Actual Credit
Non-refundable personal tax credits are listed as an amount, which is different from the actual value of the tax credit itself. The amount can be thought of in terms of the income you earn while the actual tax credit is how much your tax payable can be reduced.
For most non-refundable tax credits, the amount is multiplied by the lowest tax rate to arrive at the actual tax credit.
For example, in 2011, the federal Basic Personal Amount was $10,527 and the lowest tax rate was 15%. The value of the actual tax credit is $1,579 and it is this amount that can be used to reduce your taxes payable!
This basic rule applies to all non-refundable tax credits except for the Charitable Donation tax credit, which applies the lowest tax rate to the first $200 of the donation and the top bracket to anything above $200.