by 
The Curious Bag
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A corporate tax credit is an incentive in the form of a deduction or exemption from certain taxes to entice companies to conduct business.
Identification
Tax credits reduce a company's taxable income. This means that the company makes more money because it is paying taxes on a smaller amount of taxable income.
Function
Legislators make tax credits to entice businesses to perform a certain action. For instance, offering tax credits for the improvement of emission standards will cause some businesses to work toward the creation of cleaner fuel sources.
Refundable Tax Credits
Refundable tax credits are paid to a corporation even if it lowers the taxable income percentage of a company below zero, resulting in a tax refund from the government. They lower the amount of taxable income a corporation has.
Non-Refundable Tax Credits
Non-refundable tax credits can be wasted. This is because they cannot drop the tax liability below zero percent and expire if they will drop the tax liability of a corporation below zero.
Potential
Corporations can continue to conduct business longterm only if they are profitable. Since tax credits lower the amount income that is taxable, they aid corporations in the improvement of their profit margins.
Source:
Tax Information For Corporations
Corporate Taxation: The Concise Encyclopedia of Economics
Interpreting Tax Law: Corporate Tax Incentives - Financial Web
More Information:
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