1. What is Disposable Income?

Disposable income is the amount of money that an individual or household has available for spending and saving after income taxes and required deductions have been accounted for. It's a key measure for determining wage garnishment limits.

2. How Does the Calculator Work?

The calculator uses the disposable income formula:

Where:

• Gross Income — Total earnings before any deductions
• Taxes — All federal, state, and local income taxes
• Required Deductions — Mandatory deductions like Social Security, Medicare, etc.

Explanation: The formula calculates how much income remains after mandatory deductions, which is important for determining garnishment amounts.

3. Importance of Disposable Income Calculation

Details: Accurate disposable income calculation is crucial for determining wage garnishment limits, budgeting, and financial planning.

4. Using the Calculator

Tips: Enter gross income in dollars, taxes in dollars, and required deductions in dollars. All values must be valid (non-negative numbers).

5. Frequently Asked Questions (FAQ)

Q1: What counts as a required deduction?
A: Required deductions include federal/state taxes, Social Security, Medicare, and other mandatory withholdings.

Q2: How is disposable income used in wage garnishment?
A: Federal law limits wage garnishment to the lesser of 25% of disposable income or the amount by which weekly income exceeds 30 times the minimum wage.

Q3: Are voluntary deductions included?
A: No, voluntary deductions like 401(k) contributions or health insurance premiums are not subtracted when calculating disposable income for garnishment purposes.

Q4: What's the difference between disposable and discretionary income?
A: Disposable income is after mandatory deductions, while discretionary income is what remains after essential living expenses.

Q5: How often should I calculate my disposable income?
A: It's good practice to calculate it whenever your income or deductions change significantly, or if you're facing potential garnishment.