Tax "cuts" can come in various forms. Examples:
1. Reduction in marginal tax rates, such as reducing the rate on capital gains from 28% to 20%, then 15%. You pay less tax on the same amount of income.
2. Expansion of the tax brackets, where more income is taxed at a lower rate. For example, instead of having the first $30,000 taxed at 15%, and anything over that is taxed at 25%, it goes up to $40,000 at 15%, then 25% over that. So, if you made $40,000 taxable, the first example would cost you $7k, (30,000 x .15 = 4500, plus 10,000 x .25 = 2500, total tax of $7,000.), the second would only cost you $6k in tax (40,000 x .15). You pay less tax on the same amount of income.
3. Giving certain income special tax treatment, such as dividends. Dividends used to be considered regular income, taxable up to the old 39.6% rate, now certain dividends are special, and taxed at a maximum of 15%.
Tax credits are different - a direct reduction in your tax liability. Examples:
1. Child tax credit. You get a $1000 reduction in your tax liability for each qualifying child. If you owed $9,000 before the child tax credit, and had 3 kids of the proper age, you get a $3000 credit, and therefore only owe $6000.
2. Disabled access credit. You spend $10,000 to install a handicap access ramp to your business. You get a $5000 tax credit that directly reduces any tax you owe.
3. Earned income tax credit. Poor people who work are given a credit based on how many kids they have and how much they made. This give away reduces their tax liability, usually to zero and the balance is refundable, up to nearly $4000 a year. This is to pretend that the Congress did something about people on welfare.