How is disposable income calculated?

Disposable income can be calculated as personal income minus personal current taxes. The amount of disposable income for the residents of a country is closely followed by economists, as is the level of consumer spending, which depends in part on disposable income.

What is disposable income?

Disposable income is the amount of money that a person or family has left after paying their taxes. It is the portion of income that can be spent on necessities, such as food and rent. People can also use disposable income to pay for discretionary items, leisure activities, and investments.

What is the difference between disposable income and discretionary income?

Disposable income is the amount of income left after taxes and other mandatory charges are deducted. Discretionary income is the amount of net income an individual has to spend after all necessary expenses are paid. Economists monitor both numbers to help determine how consumers as a whole are saving, spending, and borrowing money.