Tax Efficiency

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DEFINITION of 'Tax Efficiency'

An attempt to minimize tax liability when given many different financial decisions. There is a wide variety of tax-efficient vehicles, including tax-efficient mutual funds, irrevocable trusts and tax-exempt commercial paper.

INVESTOPEDIA EXPLAINS 'Tax Efficiency'

Choosing the best tax-efficient investment can be a daunting task for those with little knowledge of the different types of products available. The best decision may be to contact a financial professional to determine if there is a way for you to make your investments more tax efficient.

RELATED TERMS
  1. Tax-Exempt Commercial Paper

    An unsecured short-term loan, usually issued to finance short-term ...
  2. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  3. Tax Liability

    The total amount of tax that an entity is legally obligated to ...
  4. Irrevocable Trust

    A trust that can't be modified or terminated without the permission ...
  5. Tax Exempt

    To be free from, or not subject to, taxation by regulators or ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
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