Interest tax shield

INTEREST TAX SHIELD - The reduction in income taxes that results from the tax-deductibility of interest...
INTEREST-BEARING - means paying interest.

For example, researchers have found that firms with relatively higher marginal tax burdens are more likely to use debt, thereby taking advantage of the interest tax shield, and firms with more nondebt tax shields, such as depreciation, ...

D = Market Value (Present Value) of Bonds
(1 - t) = 1 - tax rate = Interest tax shield deductibility of interest expense
Re = Shareholder's return requirement
V = Total value of all capital (Debt + Equity) ...

Individual Retirement Account - IRA
Insurance policy
Interest tax shield
Job Hunting Expenses
Local taxes ...

The value of a firm's deduction of the interest payments on its debt from its earnings before calculation of its tax bill under current tax law.
Interest tax shield ...

See also: Tax shield, Expense, Capital structure, Foreign investment, Bills