Abstract: An evolutionary game was set up which includes R&D expenditure, government subsidy and tax subsidy by using the evolution theory, then an improved evolutionary game was derived when the tax deferral variable be introduced into the basic model, and econometric models were established to verify the incentive effect between government subsidy and tax deferred through the panel data of Shenzhen Stock Exchange listed company. The results indicated that: (1) Government subsidies for innovation is significant more than tax preference, the aim that existing innovation incentive mechanism supports large enterprises or star enterprise innovation was to guide the mainstream direction of innovation, which ignored the scattered small personalized innovation needs, then led to resources distortion of national innovation incentive mechanism; (2)the incentive effect of indigenous innovation by tax deferred is better than by government subsidies, the most likely reason is that state-owned enterprises, which utilize their political background to cover innovation inefficient weakness, is more likely to obtain the government subsidies than private enterprises, thus cause the effectiveness of government subsidies on innovation; (3) Too low proportion of holding stock in state-owned enterprise is a critical factor of the inefficiency of state-owned enterprise innovation, the more shares the actual controller has, the distortion of innovation incentive became more obvious, the lower the efficiency of innovation.