Tax Shield Calculator

This small business tool is used to find the tax rate by using interest expenses and depreciation expenses.

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Input :

Sum of Tax Deductible Expenses = 10000

Tax Rate = 40%

Tax Shield = Sum of Tax Deductible Expenses × Tax rate

Tax Shield = 10000 × (40 / 100)

Tax Shield = 4000

How to calculate the tax shield

A Tax Shield is an allowable deduction from taxable income that results in a reduction of taxes owed.Tax shield can be claimed for a charitable contribution, medical expenditure etc. for individuals .Tax rate is primarily used for interest expense and depreciation expense in the case of a company.

Tax Shield Formula

Tax Shield = Sum of Tax-Deductible Expenses × Tax rate

Example :

Google company has an annual depreciation of $10,000 and the rate of tax is set at 20%, the tax savings for the period is $2000.