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: -Disposable income is the amount of money that households have available for spending and saving after direct taxes, such as Income Tax, National Insurance and Council Tax, have been accounted for. It includes earnings from employment, private pensions and investments as well as cash benefits provided by the state.

Detailed explanation-3: -For example, a family with an annual household income of $90, 000 that pays $20, 000 in taxes has a net disposable income of $70, 000 ($90, 000-$20, 000). Economists use disposable income to identify nationwide trends in households’ savings and spending habits.

Detailed explanation-4: -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.