Tax Shield

Tax Shield
A reduction in taxable income for an individual or corporation achieved through claiming allowable deductions such as mortgage interest, medical expenses, charitable donations, amortization and depreciation. These deductions reduce taxpayers' taxable income for a given year or defer income taxes into future years.

Tax shields vary from country to country, and their benefits will depend on the taxpayer's overall tax rate and cash flows for the given tax year.

For example, because interest on debt is a tax-deductible expense, taking on debt can act as a tax shield. Tax-efficient investing strategies are a cornerstone of investing for high-net-worth individuals and corporations, whose annual tax bills can be very high. The ability to use a home mortgage as a tax shield is a major benefit for many middle-class people whose homes are a major component of their net worth.


Investment dictionary. . 2012.

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  • Tax shield — A tax shield is the reduction in income taxes that results from taking an allowable deduction from taxable income. For example, because interest on debt is a tax deductible expense, taking on debt creates a tax shield. Since a tax shield is a way …   Wikipedia

  • Tax-Shield — Der Tax Shield (englisch, auf deutsch: Steuerschild) ist ein Begriff aus der Finanzwirtschaft. Der Tax Shield bezeichnet den Wert, den Fremdkapitalzinsen, Schulden oder Verlustvorträge zum Unternehmenswert beitragen. Da Unternehmen in den meisten …   Deutsch Wikipedia

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  • tax shield — tax shelter …   Accounting dictionary

  • tax shield — method of reducing the income that is taxed or of reducing the tax percentage …   English contemporary dictionary

  • tax shield — noun The reduction in income taxes that results from taking an allowable deduction from taxable income …   Wiktionary

  • Tax shield — The reduction in income taxes that results from taking an allowable deduction from taxable income. The New York Times Financial Glossary …   Financial and business terms

  • tax shield — The reduction in income taxes that results from taking an allowable deduction from taxable income. Bloomberg Financial Dictionary …   Financial and business terms

  • Tax — steht für Sissi Tax (* 1954) österreichische Schriftstellerin. Ignace Tax († 1977) österreichischer Sportler Tax als Begriff für Steuern Flat Tax Einheitssteuer Tax Shield Begriff der Finanzwirtschaft. Tax Justice Network (Netzwerk für… …   Deutsch Wikipedia

  • tax shelter — tax shield Any financial arrangement made to lower a person s or a company s tax liabilities. See: abusive tax shelter …   Accounting dictionary

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