ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Disposable income, also known as disposable personal income (DPI), is the amount of money that an individual or household has to spend or save after income taxes have been deducted.

Detailed explanation-2: -What is Disposable Personal Income? After-tax income. The amount that U.S. residents have left to spend or save after paying taxes is important not just to individuals but to the whole economy. The formula is simple: personal income minus personal current taxes. Learn More.

Detailed explanation-3: -Disposable income, on the other hand, refers to the income that is left after paying taxes. This is the take-home income that is available to pay for both essential and nonessential expenses.

Detailed explanation-4: -For example, suppose an individual has an income of $100, 000 and pays an income tax rate of 35%. The individual has transportation, rent, insurance, food, clothing, and other necessities totaling $35, 000 a year. Their discretionary income is $30, 000 or the amount left after subtracting taxes and necessities.

Detailed explanation-5: -Personal income includes compensation from a number of sources, including salaries, wages, and bonuses received from employment or self-employment, dividends and distributions received from investments, rental receipts from real estate investments, and profit sharing from businesses.