Enter the total income ($) and the total expenses, including tax, into the Calculator. The calculator will evaluate the Discretionary Income. 

Discretionary Income Formula

DI = I - E

Variables:

  • DI is the Discretionary Income ($)
  • I is the total income ($)
  • E is the total expenses, including tax

To calculate Discretionary Income, subtract the total expenses from the total income.

How to Calculate Discretionary Income?

The following steps outline how to calculate the Discretionary Income.


  • First, determine the total income ($). 
  • Next, determine the total expenses, including tax. 
  • Next, gather the formula from above = DI = I – E.
  • Finally, calculate the Discretionary Income.
  • After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

total income ($) = 3000

total expenses including tax = 2000

Frequently Asked Questions

What is Discretionary Income?

Discretionary income is the amount of an individual’s income that is left for spending, investing, or saving after taxes and personal necessities (like food and shelter) have been paid. It is calculated by subtracting total expenses, including taxes, from total income.

Why is understanding Discretionary Income important?

Understanding your discretionary income is crucial for effective financial planning. It helps in budgeting for non-essential expenses, saving for emergencies, and investing for future goals. Knowing your discretionary income can also assist in debt management and determining how much money you can afford to allocate towards paying off debts beyond the minimum payments.

How can I increase my Discretionary Income?

Increasing your discretionary income can be achieved by either increasing your total income or reducing your total expenses. Ways to increase income include seeking higher-paying employment, working additional hours, or starting a side business. Reducing expenses can be done by budgeting, cutting down on non-essential spending, and seeking cheaper alternatives for necessary expenses.