China has steadily expanded the scale of government subsidies to firms, raising the need for a clear evaluation of their environmental regulatory effects in the context of high-quality growth and economic restructuring. Using the National Tax Survey Database (NTSD), this study investigates the relationship between subsidies and corporate carbon emissions. The analysis identifies a significant inverted U-shaped relationship between the two.Mechanism tests reveal that fixed asset investment is a critical channel: subsidies drive substantial expansion of fixed assets, and the growth rate of these assets also exhibits an inverted U-shaped association with emissions. The heterogeneity analysis shows that this pattern is more pronounced in wholly state-owned enterprises and firms with weaker financial conditions, where subsidies exert a stronger effect in reducing emissions. In addition, greater administrative spending weakens the carbon-reduction benefits of subsidies.These findings provide new empirical evidence on the environmental effects of government subsidies and offer practical references for refining financial supervision systems.