tax-deferred income

Tax-deferred income

Dividends, interest, and unrealized capital gains on investments in an account such as a qualified retirement plan, where income is not subject to taxation until a withdrawal is made.

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tax-deferred income

The income that is earned but that is neither received nor taxed until a later date. For example, interest earned on U.S. Treasury bills is received and taxed at maturity. Likewise, U.S. savings bonds provide appreciation of value on which holders may defer paying taxes until the security is cashed in. Compare tax-free income, tax-sheltered income.