<p>This study examines the influence of environmental protection taxes on the advancement of green technological innovation within heavily polluted Chinese firms, a critical aspect in promoting sustainable development within heavily polluted Chinese firms from 2010 to 2022. Moreover, this study examines the moderating role of green subsidies on the relationship between environmental protection taxes and green innovation among heavily polluted Chinese firms. The findings suggest that environmental protection taxes exhibit a positive and significant impact on green technological innovation, with this impact being further amplified by government environmental subsidies. Additionally, the research reveals that environmental protection taxes predominantly influence practical technology innovation rather than creative innovation. Among environmental components protection taxes, exhaust gas taxation emerges as the most effective, while wastewater taxation proves to be the least effective. Furthermore, the heterogeneity analysis suggests that SOEs, especially those with higher firm ages, lower ownership concentration level, and operating in less marketized environments are more inclined to enhance their green innovation efforts in response to EPT. Moreover, this research also finds a U-shaped curve between EPT and GTI, and further quantile analysis ascertains that the positive EPT effect is more pronounced at higher tax levels. This paper contributes to the existing literature on environmental policy and green innovation, offering practical implications and recommendations for stakeholders, including policymakers, managers, and investors, on optimizing the design and implementation of environmental protection taxes and fostering green technological innovation.</p> Graphical Abstract <p></p>