Disposable Earnings Definition

Term Definition
The portion of employee income that is available to spend as they choose, after payment of taxes or other legally mandated deductions from gross income.

Extended Definition
An employee’s disposable earnings is the income remaining after legally mandated deductions have been made, including Social Security, federal tax, state tax, and state disability insurance. The deductions that do not qualify are 401(k) contributions and other employee-saving plans, life insurance, and medical insurance.

Related Article:
What Is Disposable Personal Income?