Abstract: Using Chinese listed manufacturing firms' data, this paper empirically examines the incentive effect of R&D additional deduction policy on firm’s R&D investments and verifies whether the incentive effect is related with firm heterogeneity such as market competition environment, firm size, firm life cycle stage and industry characteristics. The results are as follows: (1) Additional deduction policy has a positive effect on firm R&D input. (2)The incentive effect doses vary across firm life cycles, industry characteristics and. It’s better for mature firms and low-tech enterprises and the higher for the marketization degree, the worse is the inventive effect.