Disposable income

Disposable income: After a good part of personal income is paid to government in the form of personal taxes, income taxes, personal property taxes what remains to personal incomes is called disposable income.

We can calculate Disposable income by the following formula:

Disposable income = Personal income – personal taxes

Disposable income can either be consumed or saved.

So, we can also calculate disposable income by the following formula –

Disposable income = Consumption + savings.