United States personal finance glossary

401(k)

An employer-sponsored US retirement plan that lets employees defer a portion of pre-tax (or Roth post-tax) salary into invested accounts, often with a company match.

Adjusted Gross Income (AGI)

Total income minus specific above-the-line deductions — the figure most US tax thresholds (IRA phase-outs, IRMAA brackets, premium tax credits) key off.

Annual Percentage Yield (APY)

The standardised annual rate of return on a US savings or deposit account, accounting for the effect of compounding within the year.

Capital Gains Tax (Short vs Long-Term)

US federal tax on profit from selling an asset — short-term gains (held ≤1 year) taxed as ordinary income, long-term gains (>1 year) taxed at 0%/15%/20% preferential rates.

FICA (Federal Insurance Contributions Act)

The US payroll tax that funds Social Security (6.2%) and Medicare (1.45%), paid in equal parts by the employee and employer on most wages.

Flexible Spending Account (FSA)

An employer-sponsored US account that lets employees set aside pre-tax dollars for medical or dependent-care expenses, with a use-it-or-lose-it annual deadline.

Form 1099

The IRS information return family used to report payments to independent contractors, dividends, interest, and other non-employee income — most commonly the 1099-NEC and 1099-MISC.

Form W-2

The annual wage and tax statement a US employer sends each employee in January, summarising the prior year's wages and federal/state tax withholdings.

Health Savings Account (HSA)

A US tax-advantaged account paired with a High-Deductible Health Plan, offering triple tax benefits — deductible contributions, tax-free growth, tax-free qualified withdrawals.

Itemized Deductions

Specific tax-deductible expenses — mortgage interest, state/local taxes, charitable gifts, large medical bills — claimed on Schedule A when their total exceeds the standard deduction.

Private Mortgage Insurance (PMI)

A US insurance premium charged to borrowers with a conventional mortgage and less than 20% down — protects the lender, not the borrower, and adds 0.3–1.5% of the loan annually.

Roth IRA

A US individual retirement account funded with post-tax dollars where investment growth and qualified withdrawals are entirely tax-free.

Social Security

The US federal retirement, disability, and survivor benefit program, funded by FICA payroll tax and paying out monthly benefits based on lifetime earnings.

Standard Deduction

A flat-dollar reduction in taxable income available to every US filer — $15,000 single, $30,000 married filing jointly in 2026 — used by ~90% of filers.

Tax Bracket (Marginal Rate)

A range of taxable income taxed at a specific federal income-tax rate — the marginal rate is the rate on your last dollar of income, not the rate on your whole income.

Traditional IRA

A US individual retirement account funded with pre-tax dollars, where contributions are tax-deductible and withdrawals in retirement are taxed as ordinary income.