Interest subsidy

Interest subsidy

The value of a firm's deduction of the interest payments on its debt from its earnings before calculation of its tax bill under current tax law.

Interest Subsidy

The value of the tax deductions of an individual's or company's earnings resulting from interest payments on its debt over the course of a year. Some interest may be deducted from one's taxable income, depending on the type of loan or how it was borrowed. Common examples of interest subsidies include the deduction on home mortgage interest and student loan interest. Under most circumstances, interest on one's business is fully tax deductible.