<p>This paper investigates the links between preferential taxation, eco-technology innovation, by using 528 listed companies in China between 2014 and 2020. It explores the mediating role of eco-technology innovation in the relationship between preferential taxation and business performance, as well as the moderating effect of digital finance on this relationship. The findings show that preferential taxation promotes both eco-technology innovation and business performance. Additionally, eco-technology innovation acts as a mediator between preferential taxation and business performance, while digital finance moderates the relationship between preferential taxation and eco-technology innovation. Notably, the depth (but not the breadth) of digital finance usage strengthens this effect. This study provides insights into how preferential taxation influences eco-technology innovation and business outcomes in the digital economy, offering valuable guidance for policymakers to refine tax policies and for businesses to enhance innovation and performance.</p>