Personal Income

Personal Income is the part of National Income which is received by the households. 

The formula for calculating Personal Income (PI) is 

Personal income (PI) ≡ National Income – Undistributed profits(profits utilised by manufacturers for further production) – Net interest  payments made by households – Corporate tax + Transfer payments to the households from the government and firms(old-age pensions, unemployment compensation, relief payment etc.). 

Note 

  • Undistributed profits – these are the profits which is not distributed to the households 
  • Corporate Tax – It also does not accrue to the households 
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