basic

Interest Tax Shield from Interest Expense and Tax Rate Calculator

Tax shield = interest · tax_rate.

Compute the annual interest tax shield — the value of deductibility of interest on debt: tax shield = interest expense × marginal corporate tax rate. The present value of the perpetual tax shield (D · T) is the gain from leverage in Modigliani-Miller's with-tax framework.

Dr. Helena Ortiz By Dr. Helena Ortiz
Published Last reviewed 1 min read

Inputs

$ M
%

Results

Enter values and click Calculate to see results.
Was this helpful?

How to use this calculator

  1. Fill in the inputs above using the units you already have.
  2. Values update automatically as you type — no submit button needed.
  3. Hover any result row for the underlying formula and intermediate values.

Formula

Tax shield = Interest · Tax rate.

In depth

Compute the annual interest tax shield — the value of deductibility of interest on debt: tax shield = interest expense × marginal corporate tax rate. The present value of the perpetual tax shield (D · T) is the gain from leverage in Modigliani-Miller's with-tax framework.