Disposable Income is the portion of an individual’s income over which the recipient has complete discretion. Income includes wages and salaries. The amount of money that households have available for spending and saving after income taxes have been accounted for.

Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy. Disposable income is used to cover necessary living expenses like food, shelter, and transportation.

Calculated as:
Income - Taxes = Disposable Income

Example:  Assume your household personal income includes $100,000 from salaries and you are paying at the 35% tax rate. Your household's disposable income would then be $65,000 ($100,000 - $35,000).