Question

Distinguish between personal income and personal disposable income

Answer 1

On the other hand, discretionary income is the amount of income that a household or individual has to invest, save or spend after taxes and necessities are paid. Discretionary income is similar to disposable income because it's derived from it; however, there is one key difference.

Answer 2

ANSWER:

The main difference or the distinguishing factor between personal income and personal disposable income is the tax payment.

EXPLANATION:  

    Personal Disposable Income (PDI) and Personal Income (PI) are 2 terms which must be differentiated correctly as they are utilised interchangeably in spite of their differences.

   PDI is the amount or quantum of money which individuals have available for saving and spending after income tax to the govt. have been paid and accounted for.

   PI, also called ‘before-tax income’, is the total yearly gross income of a person from all sources of income, such as wages and salaries wages, dividends and interest on investments, employer’s contribution towards retirement funds and pension plans, rental properties, capital gains, among others.