Deferred Tax Assets: What They Are, How They Work, and Why They Matter
Warren Team
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Key terms
- AssetAnything of value that an individual or company owns, such as cash, investments, real estate, or personal property. Assets are the foundation of building wealth.
- Tax-Deferred AccountAn investment account where taxes on contributions and earnings are postponed until money is withdrawn, typically in retirement. Examples include traditional IRAs and 401(k) plans, which allow investments to grow without annual tax drag.
- Tax BracketThe range of income subject to a certain income tax rate in the progressive US tax system. Higher income levels are taxed at higher rates (marginal tax rates).
- Marginal Tax RateThe tax rate applied to your last dollar of income. In the US progressive tax system, different portions of income are taxed at different rates.
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