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What is disposable income & Discretionary income?

Levels of disposable and discretionary income are key indicators of the health of a nation’s economy. Disposable income, also known as disposable personal income (DPI) or net pay, is the amount of money you have left over from your total annual income after paying all direct federal, state, and local taxes.

How do you calculate disposable income?

Here’s the formula for calculating your disposable income is. Disposable income formula Gross income – taxes withheld = disposable income If you earn $1,500 every two weeks, and your employer deducts $230 for taxes, your disposable income would be $1,270. Your withholdings might differ for state or local taxes withheld.

What is disposable income?

Disposable income is the amount of money left to spend and save after income tax has been deducted. Our guide tackles what disposable income entails, how it differs from discretionary income, and ways it impacts your budget.

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