Permanent Difference

1. Permanent differences do not affect the deferred tax computation. They only affect the current tax computation, only the period in which they occur and not future financial or taxable income. Permanent differences are items of revenue and expense that either enter into pretax financial income but never into taxable income or enter into taxable income, but never into pretax financial income. In effect, a permanent difference is a difference between taxable income and financial income that will never reverse. See also temporary difference. Difference between accounting income and tax income that will not reverse in later years.