Disposable Earnings

HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.

Disposable Earnings

What are Disposable Earnings?

One can define disposable earnings as the amount of pay that remains following legal deductions. 

Mandatory Deductions: From gross pay, employers deduct federal, state, and local taxes, as well as Social Security, Medicare, and Unemployment Insurance tax. Additionally, employers must deduct withholdings for employee retirement per state requirements. 

Elective Deductions: Deductions that are not required by law include health and life insurance premiums, savings bonds, 401(k) contributions, etc. 

So, in short, disposable earnings are the wages that remain after mandatory deductions, but before elective deductions

Related Terms: Floating Holidays

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