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Disposable income


This term is used to describe the amount of a person's wage or salary after all compulsory deductions, such as direct taxation, pension contributions and national insurance contributions, have been made. Published accounts often demonstrate the very small increase in disposable income that may follow an apparently excessive rise in the salary of a highly paid company executive. The reason lies, of course, in high marginal rates of tax on large incomes.

Reference: The Penguin Business Dictionary, 3rd edt.