Tax Shield Law and Legal Definition
Tax shields are deductions that reduce tax liabilities. This can be done by 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. The tax shield is computed by multiplying the deduction by the tax rate itself. Generally, higher the deduction, the larger the tax shield.
