• Disposable income is net income. This is the amount left after paying taxes.
  • Discretionary income is the amount of net income remaining after covering all needs.
  • Economists track these numbers at the macro level to see how consumers save, spend and borrow.
  • Housing, food and debt are usually paid for from disposable income.
  • The government uses disposable income when deciding how much of a salary to confiscate to pay back taxes or alimony.