Based on taxation analysis, the deductions and credits can reduce what you owe in taxes each year.
This is because the tax deduction is a term used to describe what reduces how much of your income is liable to taxes.
Similarly, tax credits outright reduce the amount of tax you are deemed to pay.
Tax credits reduce the amount of tax to pay directly. For example, a tax credit of $2000 reduces your tax liability by $2000.
Hence, in this case, it is concluded that the correct answer is "reduce."
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