tax-deferred definition by American Heritage Dictionary
- Of or relating to an investment that is not liable to taxation until income is withdrawn or an appointed date is reached.
- Of or relating to the income that such an investment generates prior to becoming subject to taxation.
tax-deferred - Investment & Finance Definition
A situation in which taxes will have to be paid at some point in the future, but they are not paid now. An example of a tax-deferred investment is an Individual Retirement Account (IRA), whose earnings accumulate tax free. When the funds are withdrawn after the IRA owner reaches age 59⁄, taxes have to be paid on the withdrawn funds.