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 occur through various investment accounts, such as 401(k) plans or IRAs, where the money grows tax-free until withdrawal. By delaying taxes, individuals can potentially benefit from compound growth over time. The primary advantage of tax deferral is that it can lead to a larger amount of money available for investment, as taxes are not deducted immediately. This strategy can be particularly beneficial for long-term savings goals, such as retirement, allowing individuals to maximize their financial growth before taxes are applied.