Glossary — Wealth Informatics

Tax year 2026Updated for tax year 2026Reviewed by our editorial teamSources: IRS, SEC, FDIC, Federal Reserve

Glossary

Personal-finance terms, defined plainly.

Every personal-finance term you’ll meet on this site, defined in plain English with the math made explicit. Sourced from IRS, SEC, FDIC, Federal Reserve, and HUD definitions, then translated into language a non-specialist can act on. Each term cross-references the pillar that covers it in depth.

Hardcover financial terminology reference book with alphabetical tab dividers open beside handwritten card defining AGI

Terms live now

High-priority cornerstone terms across 10 categories

300+

Total planned

Full glossary scope, production via content engine

Looking for a specific term?

Site-wide search runs across every guide, calculator, and glossary entry — try “Roth conversion ladder,” “FICO 10T,” “QBI 2026,” etc.

Category 01 · Tax

Tax & deductions

Income tax mechanics, deductions, and tax-planning vocabulary. Full pillar coverage at Tax pillar. Tax year tagged 2026.

6 live · ~35 planned

Adjusted Gross Income AGI

Your gross income minus specific “above-the-line” deductions (student loan interest, HSA contributions, traditional IRA contributions, etc.). AGI sits on line 11 of Form 1040 and is the basis for many tax calculations and phaseouts.

Modified Adjusted Gross Income MAGI

Your AGI plus certain “added-back” items. MAGI determines eligibility for Roth IRA contributions, ACA premium tax credits, the IRA deduction phaseout, and several education credits. The exact add-backs vary by provision.

Marginal Tax Bracket

The federal income tax rate applied to your next dollar of taxable income. 2026 brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%. Important: only the income within each bracket is taxed at that rate, not all your income.

One Big Beautiful Bill Act OBBBA

Federal tax law (P.L. 119-21) signed July 2025 making TCJA permanent and adding 4 new Schedule 1-A deductions for 2026: tips ($25K), overtime ($12.5K/$25K MFJ), auto loan ($10K), senior ($6K). Also made the mortgage interest $750K cap permanent.

SALT Cap

The maximum federal itemized deduction allowed for state and local taxes paid. For 2026, the cap is $40,400 (raised from $10K under OBBBA). Phases down at high incomes — affects taxpayers in high-tax states most.

Net Investment Income Tax NIIT

A 3.8% surtax on investment income (interest, dividends, capital gains, rental income) for filers whose MAGI exceeds $200K (single) / $250K (MFJ). Often missed in tax planning because it’s not part of the regular bracket structure.

More planned in this category: AMT, Standard Deduction, Itemized Deduction, Withholding, Tax Credit, QBI, Capital Gains (LT/ST), Wash Sale, Step-up in Basis, Filing Status, Head of Household, MFJ, MFS, Self-Employment Tax, Excise Tax, Refundable vs Non-Refundable Credits, and ~20 more. See Tax pillar for current depth.

Category 02 · Retirement

Retirement accounts & rules

Tax-advantaged retirement accounts, contribution limits, and distribution mechanics. Full coverage at Retirement pillar.

6 live · ~45 planned

401(k)

Employer-sponsored, tax-advantaged retirement plan. 2026 employee contribution limit: $24,500. Catch-up for 50+: +$8,000. Super catch-up 60-63: +$11,250. Pre-tax (traditional) or after-tax (Roth) versions; employer match is always pre-tax.

Individual Retirement Account IRA

Individual tax-advantaged retirement account you open yourself (no employer needed). 2026 limit: $7,500. Catch-up for 50+: +$1,100. Two main flavors — Traditional (pre-tax) and Roth (after-tax).

Roth IRA / Roth 401(k)

After-tax retirement account. You pay tax on the contribution now; qualified distributions in retirement are tax-free. Roth IRAs have income limits (MAGI phaseout); Roth 401(k)s do not. Critical for taxable-bracket diversification.

Required Minimum Distribution RMD

The minimum amount you must withdraw from traditional retirement accounts each year starting at age 73 (75 if born 1960+). Calculated by dividing prior-year-end balance by an IRS life-expectancy factor. Failure to take = 25% penalty on missed amount.

SECURE 2.0

The Setting Every Community Up for Retirement Enhancement Act of 2022, plus subsequent amendments. Effective Jan 1, 2026: mandatory Roth treatment for catch-up contributions of high earners (W-2 wages >$145K prior year). Plus emergency-fund linked savings, student-loan match, and more.

Backdoor Roth

A technique for funding a Roth IRA when your income exceeds the direct-contribution limit. Contribute to traditional IRA, then convert to Roth. Pro-rata rule applies if you have existing pre-tax IRA balances — often the trap. Not the same as Mega Backdoor Roth (a 401(k)-based variant).

More planned in this category: Mega Backdoor Roth, Traditional IRA, Solo 401(k), SEP-IRA, SIMPLE IRA, 403(b), 457(b), TSP, Pension, Annuity, Social Security FRA, COLA, Spousal Benefit, Survivor Benefit, Vesting, Cliff Vesting, Graded Vesting, Match, Profit Sharing, Rollover, In-Service Distribution, NUA, 5-Year Rule, 10-Year Rule, Inherited IRA, Stretch IRA, Beneficiary, Successor Beneficiary, Roth Conversion, Conversion Ladder, and more.

Category 03 · Investing

Investing fundamentals

Investment vehicles, account types, and portfolio mechanics. Full coverage at Investing pillar.

6 live · ~50 planned

Index Fund

A mutual fund or ETF that tracks a specific market index (S&P 500, Total Stock Market, etc.) by holding the same securities in the same proportions. Low expense ratios (often 0.03-0.20%) because no active management. The cornerstone of passive investing.

Exchange-Traded Fund ETF

A fund that trades on a stock exchange like a stock. Often (but not always) tracks an index. More tax-efficient than mutual funds for taxable accounts because in-kind redemption mechanism reduces capital gains distributions. Examples: VTI, VOO, SPY.

Expense Ratio

The annual fee a fund charges, expressed as a percentage of assets. An expense ratio of 0.04% = $4 per $10,000 invested per year. Compounds against you over time — the single highest-impact factor you can control in passive investing.

Asset Allocation

The split of your portfolio across asset classes — stocks, bonds, real estate, cash. Drives ~90% of long-run portfolio variance per landmark Brinson-Hood-Beebower analysis. The decision matters more than which specific funds you pick within each class.

Tax-Loss Harvesting TLH

Selling a security at a loss to offset capital gains (and up to $3,000 of ordinary income per year). Requires 30-day wash-sale window — can’t repurchase the same or “substantially identical” security within 30 days before or after.

Form 1099-DA

New IRS form (effective tax year 2025, reportable Jan 2026) requiring digital-asset brokers (Coinbase, Kraken, etc.) to report crypto sale proceeds. Cost-basis reporting phases in 2026. Marks the end of the under-the-radar era for retail crypto taxes.

More planned in this category: Mutual Fund, Bond, Treasury Bill/Note/Bond, TIPS, Series I Bond, REIT, Brokerage Account, Cash Account vs Margin, Capital Gain (LT/ST), Dividend (Qualified/Ordinary), Total Return, Real Return, Inflation-Adjusted Return, Standard Deviation, Sharpe Ratio, Beta, Alpha, Dollar-Cost Averaging, Rebalancing, Glide Path, Target-Date Fund, Three-Fund Portfolio, Boglehead, Stock Pick, Active vs Passive, and more.

Category 04 · Mortgage

Mortgage & lending

Mortgage mechanics, lending terms, and borrower-side vocabulary. Full coverage at Mortgage pillar.

6 live · ~40 planned

Annual Percentage Rate APR

The total annual cost of borrowing, including the note rate plus most closing costs (origination fees, points, certain other charges), expressed as a percentage. Required by federal Truth in Lending Act disclosure. APR > note rate by definition for nearly all mortgages.

Loan-to-Value LTV

The ratio of your mortgage balance to the home’s appraised value, expressed as a percentage. LTV ≤ 80% avoids PMI on conventional loans. Higher LTVs typically carry rate add-ons. Refi LTV calculated on the new appraisal.

Private Mortgage Insurance PMI

Insurance protecting the lender (not you) against default, required when LTV exceeds 80% on conventional loans. Cost: roughly 0.3-1.5% of loan balance per year. Falls off automatically at 78% LTV per Homeowners Protection Act. PMI deduction restored for 2026 under OBBBA.

Debt-to-Income Ratio DTI

Monthly debt payments divided by gross monthly income. Front-end DTI: housing payment only. Back-end DTI: all recurring debt. Conventional max ~45% back-end (some flexibility to 50%); FHA max ~43-50%. Critical underwriting metric.

Conforming Loan Limit

The maximum loan amount that can be purchased by Fannie Mae or Freddie Mac. 2026 limit: $832,750 (general); $1,249,125 (high-cost areas — Hawaii, Alaska, certain counties). Loans above this are “jumbo” and follow different underwriting.

Discount Points

Fees paid upfront to buy down the interest rate. 1 point = 1% of loan amount, typically reduces the note rate by roughly 0.125-0.25%. Calculate the break-even by dividing point cost by monthly savings — if you sell or refi before that month, points lose money.

More planned in this category: Note Rate, Closing Costs, Escrow, Title Insurance, Property Tax, FHA Loan, VA Loan, USDA Loan, Jumbo Loan, Conforming Loan, ARM (Adjustable-Rate Mortgage), Fixed-Rate Mortgage, 15-Year vs 30-Year, Pre-Approval vs Pre-Qualification, Lock vs Float, Cash-Out Refi, Rate-and-Term Refi, Streamline Refi, HELOC, Home Equity Loan, Reverse Mortgage, and more.

Category 05 · Debt

Debt & payoff strategies

Debt-payoff mechanics, student-loan vocabulary, and consolidation terms. Full coverage at Debt pillar.

5 live · ~30 planned

Debt Avalanche

Pay minimums on all debts; direct extra payments to the highest-rate debt first. Mathematically optimal — minimizes total interest paid. Slower psychological wins than snowball but better outcome dollar-for-dollar.

Debt Snowball

Pay minimums on all debts; direct extra payments to the smallest-balance debt first, regardless of rate. Pays more total interest than avalanche but produces faster psychological wins (closing accounts) that improve adherence for many borrowers.

SAVE Plan

Income-driven repayment plan for federal student loans (Saving on a Valuable Education). Vacated by 8th Circuit ruling March 10, 2026. Existing enrollees being transitioned to other plans through 2026. Replaced going forward by RAP.

Repayment Assistance Plan RAP

New income-driven repayment plan replacing SAVE. Launches July 1, 2026. Calculation: 1-10% of AGI based on income, with forgiveness after 30 years. Affects all federal student-loan borrowers on income-driven plans going forward.

Public Service Loan Forgiveness PSLF

Forgiveness of remaining federal student-loan balance after 120 qualifying monthly payments (10 years) while employed full-time by a qualifying government or 501(c)(3) employer. The qualifying-payment definition has been the source of historical disputes — careful documentation required.

More planned in this category: Balance Transfer, Consolidation, Refinancing, 0% APR Promo, Promotional Period, Minimum Payment Trap, Default, Delinquency, Collections, Charge-Off, Debt-to-Income (cross-ref Mortgage), Federal Student Loan, Private Student Loan, Direct Loan, FFEL, Grace Period, Deferment, Forbearance, Income-Driven Repayment (IDR), PAYE, IBR, ICR, REPAYE, Standard Plan, Extended Plan, Graduated Plan, and more.

Category 06 · Banking

Banking & cash management

Deposit accounts, yield mechanics, and protection limits. Full coverage at Banking pillar.

5 live · ~25 planned

Annual Percentage Yield APY

The effective annual return on a savings account, CD, or money-market account, accounting for the effect of compounding. APY > APR (interest rate) for any account compounded more than annually. Use APY when comparing savings products — not the headline rate.

High-Yield Savings Account HYSA

A savings account paying a meaningfully higher APY than a typical brick-and-mortar bank. Current top-tier APYs ~5.00% as of mid-2026. Usually offered by online-only banks (with lower overhead) or credit unions. FDIC- or NCUA-insured.

Certificate of Deposit CD

A time deposit that locks your money for a specified term in exchange for a guaranteed interest rate. Early-withdrawal penalty if you cash out before maturity. CD ladders smooth liquidity by staggering maturities. Brokered CDs have different mechanics — traded on a secondary market.

FDIC Insurance

Federal Deposit Insurance Corporation insurance protecting depositors at member banks. $250,000 per depositor, per insured bank, per ownership category. Joint accounts effectively double coverage. Does not cover investments — only deposit accounts.

FedNow

Federal Reserve’s instant-payment network, launched July 2023. 24/7/365 real-time transfers. As of November 2025, individual transaction limit raised to $10 million. Replaces the speed gap historically filled by Zelle and Venmo for bank-to-bank transfers.

More planned in this category: NCUA Insurance (credit union equivalent), Money Market Account, Money Market Fund, Sweep Account, Cash Management Account, Compound Interest, Simple Interest, Daily vs Monthly Compounding, ACH, Wire Transfer, Routing Number, Account Number, Overdraft, Overdraft Protection, NSF Fee, Monthly Maintenance Fee, Direct Deposit, ATM Network, Beneficial Owner, and more.

Category 07 · Insurance

Insurance & healthcare

Premiums, deductibles, and the ACA/Medicare framework. Full coverage at Insurance pillar.

6 live · ~40 planned

Deductible

The amount you pay out of pocket before insurance starts paying. Lower deductible = higher premium, and vice versa. Health insurance, auto, property — same concept across all categories. Family vs individual deductibles work differently in health insurance.

Out-of-Pocket Maximum

The most you’ll pay for in-network covered services in a plan year, after which insurance covers 100%. Includes deductibles, copays, and coinsurance — but typically excludes premiums and out-of-network charges. 2026 ACA OOP max: $10,150 (individual) / $20,300 (family).

Affordable Care Act ACA

2010 federal law creating the individual marketplace, premium tax credits, and pre-existing-condition protections. Enhanced subsidies expired Dec 31, 2025 — 2026 marketplace operates under pre-2021 subsidy structure. Affects affordability for millions, especially middle-income enrollees.

Health Savings Account HSA

Triple-tax-advantaged account for medical expenses, available with HDHP coverage. 2026 limit: $4,400 (individual) / $8,750 (family). Contributions are deductible, growth is tax-free, qualified medical withdrawals are tax-free. After 65, non-medical withdrawals taxed like a traditional IRA.

Medicare

Federal health insurance for ages 65+ and certain disabilities. Part A: hospital (premium-free for most). Part B: outpatient ($202.90/mo in 2026). Part C: Medicare Advantage (private alternative). Part D: prescription drugs (with $2,100 OOP cap as of 2026). IRMAA adds surcharges at higher incomes.

DIME Method

Framework for sizing term life insurance coverage. Debt + Income replacement (10 years) + Mortgage payoff + Education costs for children. Useful for back-of-envelope sizing; doesn’t replace fact-finding with a fiduciary planner for complex situations.

More planned in this category: Premium, Copay vs Coinsurance, HDHP, FSA, LPFSA, DCFSA, Open Enrollment, Special Enrollment Period, Pre-Existing Condition, Network (In/Out), Provider Directory, Formulary, Step Therapy, Prior Authorization, Term Life Insurance, Whole Life Insurance, Universal Life, Variable Life, Disability Insurance (Short/Long-Term), Own-Occupation vs Any-Occupation, Elimination Period, Benefit Period, IRMAA, Medicare Supplement (Medigap), Medicare Plan Finder, SHIP, COBRA, Mini-Med, ERISA Plan, and more.

Category 08 · Estate

Estate planning

Wills, trusts, beneficiaries, and the federal estate-tax framework. Full coverage at Estate pillar.

5 live · ~30 planned

Federal Estate Tax Exemption

The amount your estate can transfer at death without federal estate tax. 2026: $15 million per individual / $30 million per married couple, now PERMANENT under OBBBA. Above the exemption, top federal estate tax rate is 40%. State-level estate taxes (Massachusetts, Oregon, New York, and others) have lower thresholds.

Step-Up in Basis

Inherited property generally receives a basis adjustment to fair market value at the decedent’s date of death. Eliminates capital-gains tax on appreciation up to that point. Critical estate-planning consideration — affects whether to gift during lifetime or hold until death.

Probate

The court-supervised process of validating a will, paying creditors, and distributing assets. Public, slow (typically 6-12 months), and expensive in some states. Assets passing by beneficiary designation (retirement accounts, life insurance) or trust generally avoid probate.

Inherited IRA / 10-Year Rule

Per the SECURE Act and final regulations (T.D. 10001), most non-spouse beneficiaries must fully distribute inherited retirement accounts within 10 years of the original owner’s death. Annual RMDs required during those 10 years if owner had begun RMDs. Substantial tax-planning implications for high-balance inheritances.

Beneficiary Designation

The named recipient on a retirement account, life insurance policy, or transfer-on-death (TOD) registration. Beneficiary designations override your will. Annual review essential — outdated designations after divorce, death, or birth of new children are a major source of unintended estate outcomes.

More planned in this category: Will, Living Will, Living Trust, Revocable Trust, Irrevocable Trust, Grantor Trust, Bypass Trust, AB Trust, QTIP Trust, Special Needs Trust, Charitable Remainder Trust, Power of Attorney (POA), Durable POA, Healthcare POA, HIPAA Authorization, Executor, Trustee, Successor Trustee, TOD Designation, POD Designation, Joint Tenancy, Tenancy in Common, Community Property, Gift Tax, Annual Gift Exclusion, Generation-Skipping Tax (GST), and more.

Category 09 · Credit

Credit scoring

FICO/VantageScore mechanics and credit-report fundamentals. Full coverage at Credit pillar.

5 live · ~25 planned

FICO Score

Credit score developed by Fair Isaac Corporation. Scale 300-850. Major components: payment history (35%), amounts owed/utilization (30%), length of credit history (15%), credit mix (10%), new credit (10%). Multiple FICO versions exist for different industries (auto, mortgage, bank card).

FICO 10T

Newest FICO model. Uses 24-month trended data (how balances change month-to-month) rather than point-in-time snapshots. Adopted by HUD + FHFA April 22, 2026 for all FHA-insured and Fannie/Freddie-acquired mortgages. Carrying a constant high balance now penalizes more than transient spikes.

VantageScore 4.0

Credit score developed by the three credit bureaus jointly. Same 300-850 scale as FICO but uses different weighting and includes alternative data (rental payments, utilities). Adopted alongside FICO 10T by HUD + FHFA April 22, 2026 for federal-program mortgages — lenders can use either.

Credit Utilization

The ratio of revolving credit balances to total available credit. Below 30% is the conventional threshold; below 10% is optimal. Calculated overall and per-card — high utilization on a single card hurts even if overall is low. Reported to bureaus on the statement date, not the due date.

Hard Inquiry vs Soft Inquiry

Hard inquiry: when you apply for credit; lender pulls your full report. Affects FICO score by a few points and stays on report 2 years. Soft inquiry: when you check your own credit, employers run background checks, or pre-approved offers are generated. No score impact.

More planned in this category: Credit Report, Credit Bureau (Equifax, Experian, TransUnion), Annual Credit Report, Credit Freeze, Credit Lock, Fraud Alert, Authorized User, Joint Account, Closed Account, Charge-Off, Collection, Public Record, Bankruptcy (Chapter 7/13), Foreclosure, Repossession, Late Payment, Days Past Due (30/60/90/120), Credit Limit, Credit Line Increase, and more.

Category 10 · FIRE

FIRE & withdrawal frameworks

Financial Independence / Retire Early vocabulary and withdrawal-rate analysis. Full coverage at FIRE pillar.

5 live · ~25 planned

FIRE FI/RE

Financial Independence, Retire Early. The framework of saving aggressively (often 50-70% of income) until passive income from invested assets can sustain living expenses indefinitely, enabling optional retirement years or decades before traditional retirement age.

4% Rule

Withdrawal-rate framework: withdrawing 4% of your initial portfolio in year one, adjusted annually for inflation, has historically supported 30-year retirements. Based on the Trinity Study (1998) using US historical data, mostly 60/40 stock/bond portfolios. Probabilistic, not guaranteed — sequence risk matters.

Coast FIRE

A FIRE variant where you’ve saved enough that compounding alone will get you to retirement at traditional age, even if you stop contributing entirely. Allows reducing income or career change while preserving long-run financial independence. Distinct from Barista FIRE (which still requires income for current expenses).

72(t) Distribution

A series of Substantially Equal Periodic Payments (SEPP) from a retirement account, allowing penalty-free withdrawals before age 59½. Must continue for 5 years or until age 59½, whichever is later — breaking the schedule retroactively imposes the 10% penalty. Three calculation methods (RMD, amortization, annuitization).

ACA Bridge

Using the ACA marketplace for health coverage in early-retirement years before Medicare eligibility at 65. Premium tax credits scale with MAGI, so withdrawing from taxable / Roth (which don’t generate MAGI for ACA purposes) can keep subsidies high. Major early-FIRE planning consideration — especially with enhanced subsidies expired in 2026.

More planned in this category: Lean FIRE, Fat FIRE, Barista FIRE, Slow FIRE, FIRE Number, Crossover Point, Safe Withdrawal Rate (SWR), Perpetual Withdrawal Rate (PWR), Sequence-of-Returns Risk, Monte Carlo Simulation, Trinity Study, Bengen Study, Bond Tent, Glide Path, Bucket Strategy, Variable Withdrawal, Guyton-Klinger Guardrails, CAPE-Based Withdrawal, Roth Conversion Ladder, Geographic Arbitrage, Single-Premium Immediate Annuity (SPIA), and more.

More terms coming

55 terms today. 300+ on the production roadmap.

The full glossary is being built out via the content engine alongside the pillar deep-dive pages. Each future term will get its own dedicated page with extended definition, worked examples, common misconceptions, and cross-references to the pillar guides — the in-line entries above are the high-priority quick-reference subset.

If a term you need isn’t here yet, the All Guides hub may already have it covered in long-form, or the contact form is the fastest path — we add high-demand terms first.

Sourced from IRS, SEC, FDIC, Federal Reserve

Reviewed by our editorial team

Updated for tax year 2026

Re-reviewed every year

No paid placements

Not financial advice

Personal-finance terms, defined plainly.

Looking for a specific term?

Tax & deductions

Retirement accounts & rules

Investing fundamentals

Mortgage & lending

Debt & payoff strategies

Banking & cash management

Insurance & healthcare

Estate planning

Credit scoring

FIRE & withdrawal frameworks

55 terms today. 300+ on the production roadmap.

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