Increasing the share of labor compensation in the primary distribution is an important way to promote prosperity for all. The theoretical analysis shows that the tax benefits resulting from the accelerated depreciation policy of fixed assets will reduce the relative price of capital, and when the elasticity of substitution between capital and labor is less than one, the policy will increase the labor share of income of enterprises by increasing their capital intensity as well as alleviating their financing constraints. Based on the quasi-natural experiment of the accelerated depreciation policy of fixed assets introduced by the Cai Shui [2014] No.75, Cai Shui [2015] No.106, Announcement 64 of the State Administration of Taxation in 2014, and Announcement 68 of the State Administration of Taxation in 2015, the study finds that the policy significantly raises the enterprises’ labor share of income by using Chinese listed company data from 2007 to 2017 and the difference-in-differences method. The results are robust to various tests, including a nonparametric permutation test, PSM-DID tests, the exclusion of other policy effects over the same period, and taking into account the heterogeneous treatment effects. We also show that the elasticity of substitution between capital and labor of Chinese listed companies is less than one, and that the implementation of the policy has promoted the fixed asset investment of enterprises, increased capital intensity, and alleviated financing constraints. The study also reveals that the policy has a greater effect on non-state enterprises, high capital-intensity enterprises, and smaller enterprises.