Taxation is a key factor influencing the development of enterprises, especially value-added tax (VAT), which is the largest tax category in China, and it is closely related to the production and operation activities of enterprises. Based on panel data of A-share listed companies from 2015 to 2022, this study empirically tests the impact and mechanism of value-added tax retention and refund policies on the share of labor income of enterprises using the Difference-in-Differences (DiD) model. The results showed that the value-added tax deduction and refund increased the share of labor income in enterprises, and this positive effect was more significant in the samples of labor income share in the eastern region, non-state-owned enterprises, and ordinary employees. The mechanism test also found that the value-added tax deduction and refund can increase the share of labor income of enterprises by alleviating internal and external financing constraints. In future, it is of great necessity to take such measures as further refining the value-added tax retention and refund policy and enhancing its targeting precision to increase the share of enterprise labor income.