tax shelter


Definition of tax shelter

: a strategy, investment, or tax code provision that reduces tax liability

Keep scrolling for more

Other Words from tax shelter

tax-sheltered \ ˈtaks-​ˌshel-​tərd How to pronounce tax-sheltered (audio) \ adjective

Examples of tax shelter in a Sentence

Recent Examples on the Web The pair specialized in buying and selling historic properties as tax shelters, but the business collapsed after disgruntled investors sued them over alleged fraud and securities violations. Michael Biesecker, Fortune, "Charities steered $65 million to Trump lawyer Sekulow and family," 31 Jan. 2020 That tax provision means a sports team purchase provides a great tax shelter, said Michael Breit, partner-in-charge of accounting firm EisnerAmper's sports and entertainment group. Khristopher J. Brooks, CBS News, "How hedge fund giant Steve Cohen could change the NY Mets," 6 Dec. 2019 Harris also proposed a tax on stock trades and called for an end to foreign tax shelters as part of her plan to pay for the proposal. NBC News, "Inslee's new energy plan aims puts focus on low-income communities," 29 July 2019 Opinion: Scholarship tax credits are private school vouchers and tax sheltersReach Olivia Krauth at or 502-582-4471, and on Twitter at @oliviakrauth. Olivia Krauth, The Courier-Journal, "'Trapped in failing school system': Families push for scholarship tax credits in Kentucky," 27 Jan. 2020 Those benefits include: triple tax shelter (contributions, account earnings and withdrawals all are untaxed), funds in an account can be invested, funds don’t expire, and funds can be passed to a beneficiary at death. Russ Wiles, azcentral, "3 things you can do in 2020 to get your finances in shape for retirement," 26 Jan. 2020 Working a network of contacts, including a local pastor, Mr. Sekulow swiftly moved from routine real estate closings and wills to a business renovating and flipping historic properties, at the time a popular tax shelter for the wealthy. Elizabeth Williamson, New York Times, "Trump’s Other Personal Lawyer: Close to the Right, but Far From Giuliani," 1 Dec. 2019 Working a network of contacts, including a local pastor, Sekulow swiftly moved from routine real estate closings and wills to a business renovating and flipping historic properties, at the time a popular tax shelter for the wealthy., "You're using a browser set to private or incognito mode.," 2 Dec. 2019 To make up the revenue difference, Harris proposes a 0.2% tax on stock trades, a 0.1% tax on bond trades and 0.002% tax on derivative transactions, as well as eliminating foreign tax shelters. Tal Kopan,, "Kamala Harris unveils Medicare for All plan ahead of Democratic debate," 29 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'tax shelter.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

See More

First Known Use of tax shelter

1952, in the meaning defined above

Keep scrolling for more

Learn More about tax shelter

Time Traveler for tax shelter

Time Traveler

The first known use of tax shelter was in 1952

See more words from the same year

Statistics for tax shelter

Last Updated

29 May 2020

Cite this Entry

“Tax shelter.” Dictionary, Merriam-Webster, Accessed 5 Jul. 2020.

Keep scrolling for more

More Definitions for tax shelter

tax shelter


Financial Definition of tax shelter

What It Is

A tax shelter is a means of minimizing one's tax liability. Tax shelters can be both legal and illegal.

How It Works

The most widely used tax shelter in the United States is the 401(k) employer sponsored plan. It is generally available to an employee to both reduce the amount of taxes paid on his income as well as to save for his future retirement.

The Internal Revenue Service (IRS) investment vehicles such as 401(k)s and IRAs as legal tax avoidance mechanisms.

Limited partnerships are also considered legal tax shelters. They can avoid taxes because the business -- for example mining companies --require several years and heavy capital investment before a real income is realized. Taxes are levied as soon as the company starts to make income.

[InvestingAnswers Feature: The Most Important Tax Changes to Know Before Filing Your Tax Return]

Why It Matters

While retirement plans and limited partnerships are legal, many investment vehicles are illegal. A series of tax laws have been implemented to put a stop to abusive tax shelters.

The IRS will attach a fee if one places money into an "abusive" shelter. Abusive shelters are those that "exist primarily to reduce taxes unreasonably for tax avoidance or evasion... A legitimate investment produces income or capital appreciation and involves a risk of loss proportionate to the investment."

Illegal tax shelters include offshore companies which beguile the tax system.

More information on tax shelters may be found at the IRS website.

[InvestingAnswers Feature: How to Avoid an IRS Audit]

Source: Investing Answers

tax shelter


English Language Learners Definition of tax shelter

: a way of investing money that reduces the amount of tax that has to be paid

tax shelter


Legal Definition of tax shelter

: an entity (as a partnership) or investment plan or arrangement whose principal purpose is the avoidance or evasion of income tax also : an interest offered or purchased on the premise that it will provide favorable tax consequences

More from Merriam-Webster on tax shelter Encyclopedia article about tax shelter

Comments on tax shelter

What made you want to look up tax shelter? Please tell us where you read or heard it (including the quote, if possible).


See Definitions and Examples »

Get Word of the Day daily email!

Test Your Vocabulary

A More Exception(al) Quiz

  • hot dog  hot dog  hot dog  hot dog cat
  • Which of the following words is not a synonym for ‘a young person’?
Spell It

Can you spell these 10 commonly misspelled words?

Dictionary Devil

Test Your Knowledge - and learn some interesting things along the way.

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!