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What is the difference between deleting a tax and disabling it?

Both prevent the tax from being used in new transactions, but they differ in one important case:

Deletion Disabling
When is it available Only if the tax has not been used in any transaction At any time even if it has been used
Can it be undone No — deletion is permanent Yes — it can be re-enabled at any time
What happens to old transactions  They are not deleted (because deletion is not available when the tax is in use) They remain as they are with their original values
Does it disappear from new transaction dropdowns? Yes Yes

In summary: If the tax has been used in previous transactions your only option is to disable it. If it has not been used you can delete it if you want to remove it permanently, or disable it if you want to keep it for later use.