Abstract: This paper constructs a model of R&D policy mix, heterogeneity R&D (research and development) investment and innovation(breakthrough innovation and incremental innovation),and presents three effects of R&D policy mix affecting firm’s innovation choice：hurdle effect, entry deterring effect and stealing effect. Using the panel data of 1194 listed enterprises in China from 2011 to 2018,this paper assesses the extent to which R&D policy mix has contributed to enterprise innovation. Empirical estimates indicate that, First, R&D subsidy significantly promotes firm’s incremental innovation, while tax incentive has no significant impact on firm’s innovation. Second, there is significant heterogeneity in the policy effect：R&D subsidy significantly raises state-owned enterprise’s incremental innovation, while the effect of tax incentive on incremental innovation is stronger in non-state-owned enterprise. Compared with non-high-tech enterprises, R&D subsidy is more beneficial to high-tech enterprise’s both breakthrough and incremental innovation, while tax policy has no significant incentive effect on incremental innovation of high-tech and non-high-tech enterprises. Third, in terms of subsidy policy, when the hurdle effect dominates, R&D subsidy can effectively reduce the R&D cost of enterprises and promote breakthrough innovation by increasing firm’s research investment. When stealing effect is dominant, it can stimulate firm’s research investment, due to the innovation profit cannot be fully occupied, it urges enterprises to choose incremental innovation. If entry deterring effect dominates, it can stimulate firm’s development investment, and then promotes the incremental innovation. As for tax policy, it can effectively reduce the entry cost of enterprises, when tax incentive can promote incremental innovation by increasing firm’s development investment, entry deterring effect is more prominent. These results show that different R&D policy toolkit has several channels on breakthrough and incremental innovation, which provides reference for the government to identify innovation policy instrument combinations.