Cost of debt tax is basically the rate a company pays for its current debt. As for the IRS, there is the before cost of debt and after cost of debt to be considered. Debt is, in effect, discounted by the tax rate. Like most tax matters, cost of debt is a detailed equation that involves adding up the debt owed by a company and then figuring in their marginal rate. Figuring the before and after cost of debt should be left to a qualified expert in the field. As with any tax matter, it is imperative to be very accurate when computing taxes. This is one of the tax laws that can be very complicated to figure out. An accountant or CPA would be the best to compute this figure for a company. If any problems arise out of the calculation, seek out a qualified tax attorney. Cost of debt tax is normally needed by corporations that deal with bonds or stocks.