Investment Tax Credit

Definition

An investment tax credit is a tax incentive provided by governments to encourage businesses to invest in capital goods. It reduces the tax liability of businesses based on a percentage of their investment expenditure.

Related terms

Tax Incentive: A tax incentive is any measure that reduces the amount of taxes owed by individuals or businesses as an encouragement for specific behaviors or actions.

Capital Goods: Capital goods are long-lasting assets used in production, such as machinery, equipment, or buildings.

Tax Liability: Tax liability refers to the total amount of taxes owed by an individual or business to the government.