Money that is tax-deferred is money you don't pay tax on now — you pay it later, usually years later, when you finally take the money out and use it. The tax does not disappear; it just waits. You will meet this word almost only when people talk about saving for old age: retirement accounts, some kinds of insurance, some investment plans. A worker puts part of each month's pay into such an account, pays no tax on that part this year, and pays tax on it when they retire and take it out. People like this for two reasons: the money that would have gone to tax stays in the account and keeps growing, and many people earn less after they retire, so the tax rate then may be lower. Notice the shape of the word: it is nearly always used in front of a noun — a tax-deferred account, tax-deferred savings, tax-deferred growth. It belongs to banking, finance and news writing, not to daily conversation. Ordinary people talk about it, but usually using the whole phrase they read on the bank's form. One honest note: how much this helps depends on tax rules that differ from country to country and change over time, so a plan that is a good idea in one place may be an ordinary one in another.