Legal Definitions - investment tax credit

An investment tax credit is a type of tax credit that allows a percentage of the purchase price of capital goods to be deducted from the taxpayer's income taxes. This credit is intended to stimulate business investment in capital goods.

For example, if a business purchases a new piece of equipment for $10,000 and the investment tax credit is 10%, the business can deduct $1,000 from their income taxes.

However, it's important to note that the Tax Reform Act of 1986 generally repealed this credit retroactively for most property placed in service after January 1, 1986.

Overall, the investment tax credit is a way for businesses to save money on their taxes while also investing in their own growth and development.