What is a tax-advantaged account?

A tax-advantaged account is an investment account that provides tax benefits — either a deduction on contributions (Traditional IRA, 401k) or tax-free growth and withdrawals (Roth IRA, Roth 401k). Health Savings Accounts (HSAs) offer both a deduction and tax-free withdrawals for medical expenses, making them uniquely powerful. Maxing these accounts before investing in taxable accounts is a core personal finance principle.