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Tax incentive that permits companies or individuals to deduct a specified percentage of certain investment costs from their tax liability in addition to the normal allowances for depreciation. Investment credits are similar to investment allowances, which permit investors or businesses to deduct a specified percentage of certain capital costs from taxable income. Both investment credits and investment allowances differ from accelerated depreciation by offering a percentage deduction at the time an asset is purchased. In effect, the credits are subsidies for investment. Investment credits and investment allowances were adopted by the U.S. in 1962 in order to protect domestic business from foreign competition but have since been applied toward the support of energy conservation, pollution control, or various forms of desirable economic development.
Variants of INVESTMENT CREDIT
investment credit or investment tax credit
This entry comes from Encyclopædia Britannica Concise. For the full entry on investment credit, visit Britannica.com.
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