tax deferral

Tax deferral is a financial strategy that allows individuals or businesses to postpone paying taxes on certain income or gains until a later date. This can happen through specific accounts, like retirement plans (e.g., 401(k)s or IRAs) or investment vehicles. By deferring taxes, you may benefit from continued investment growth over time without the immediate tax burden. Ultimately, you will owe taxes when you withdraw funds or sell investments, often at a time when you may be in a lower tax bracket, potentially reducing your overall tax liability.