Definitions for disposable and discretionary income
This page provides all possible meanings and translations of the word disposable and discretionary income
Disposable and discretionary income
Disposable income is total personal income minus personal current taxes. In national accounts definitions, personal income, minus personal current taxes equals disposable personal income. Subtracting personal outlays yields personal savings. Restated, consumption expenditure plus savings equals disposable income after accounting for transfers such as payments to children in school or elderly parents’ living arrangements. The marginal propensity to consume is the fraction of a change in disposable income that is consumed. For example, if disposable income rises by $100, and $65 of that $100 is consumed, the MPC is 65%. Restated, the marginal propensity to save is 35%. For the purposes of calculating the amount of income subject to garnishments, United States' federal law defines disposable income as an individual's compensation after the deduction of health insurance premiums and any amounts required to be deducted by law. Amounts required to be deducted by law include federal, state, and local taxes, state unemployment and disability taxes, social security taxes, and other garnishments or levies, but does not include such deductions as voluntary retirement contributions and transportation deductions. Those deductions would be made only after calculating the amount of the garnishment or levy. The definition of disposable income varies for the purpose of state and local garnishments and levies.
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"disposable and discretionary income." Definitions.net. STANDS4 LLC, 2014. Web. 2 Oct. 2014. <http://www.definitions.net/definition/disposable and discretionary income>.