Depreciation Tax Shield Calculator

Formula

The formula to calculate the Depreciation Tax Shield (DTS) is:

\[ DTS = \left( \frac{ATR}{100} \right) \cdot DD \]

Where:

$ DTS $ is the Depreciation Tax Shield ($).
$ ATR $ is the Applicable Tax Rate (%).
$ DD $ is the Total Depreciation Deducted ($).

What is a Depreciation Tax Shield?

A depreciation tax shield is defined as the amount of money that can be deducted from your taxes due to the depreciation of your assets. It represents the tax savings achieved by deducting depreciation expenses from taxable income.

Example Calculation

Consider an example where:

Applicable Tax Rate (ATR): 30%
Total Depreciation Deducted (DD): $10,000

Using the formula to calculate the Depreciation Tax Shield:

\[ DTS = \left( \frac{30}{100} \right) \cdot 10000 = 3000 \text{ dollars} \]

This means that the depreciation tax shield for this example is $3,000.