The implementation of the Environmental Tax Law is a milestone in promoting China's green tax reform. However, the existence literature has lacked attention to whether it leads enterprises to invest in green environmental protection. To examine the Environmental Tax Law effects and mechanism on the environmental investment of heavy-polluted enterprises, this study used the data of heavy-polluted enterprises listed on the A-share market from 2012 to 2020 and regarded the Environmental Tax Law as a quasi-natural experiment to employ a difference-in-differences model. We found that environmental tax improves the green environmental investment of heavy-polluted enterprises, reflecting the guiding role of policy on enterprise investment allocation. Heterogeneity was found, and the promotion effect of environmental tax reform on enterprise environmental investment is more significant in non-nation-owned, central-western regions, and small-scale enterprises. Further analysis believed that market competition, as an external mechanism, helps strengthen environmental tax reform's implementation effect. The findings of this paper provide a new proof for a comprehensive understanding of the micro-effect of environmental tax reform and provide a reference for the implementation of green development strategies.