1. What Is Discretionary Income?

Discretionary Income (DI) is the amount of an individual's income that is left for spending, investing, or saving after taxes and necessities are paid. It's calculated by subtracting 150% of the poverty guideline from your Adjusted Gross Income (AGI).

2. How The Calculator Works

The calculator uses the discretionary income formula:

Where:

• \( AGI \) — Adjusted Gross Income in IDR
• \( Poverty\_Line \) — Official poverty guideline amount in IDR
• 1.5 — Standard multiplier (150% of poverty line)

Explanation: This calculation determines how much income you have available for non-essential expenses after accounting for basic living costs.

3. Importance Of Discretionary Income

Details: Discretionary income is crucial for financial planning, determining loan repayment amounts (especially for income-driven repayment plans), and assessing overall financial health.

4. Using The Calculator

Tips: Enter your AGI and the current poverty line amount in IDR. Both values must be positive numbers. The calculator will compute your discretionary income.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between disposable and discretionary income?
A: Disposable income is after-tax income, while discretionary income subtracts essential living costs from disposable income.

Q2: Why use 150% of the poverty line?
A: This multiplier accounts for basic living expenses beyond just the official poverty threshold.

Q3: How often should I calculate my discretionary income?
A: Annually or whenever your income or family size changes significantly.

Q4: Where can I find the current poverty line amounts?
A: Check official government publications or financial aid websites for the most current poverty guidelines.

Q5: Can discretionary income be negative?
A: Yes, if your AGI is less than 150% of the poverty line, indicating very limited financial resources.