Personal Income

Personal income is an important concept in national income accounting. Personal income refers to the total of all current income received by households of a country in a year. It is the actual income (both factor income and current transfer income) received by the households. All the firms retain a part of their profits, not available to the households. These are undistributed profits which have two components, viz. (i) Corporation tax and (ii) Corporate saving. These two elements are not a part of personal income.

Definition

According to Peterson, “Personal income is the income actually received by persons from all sources in the form of current transfer payments and factor income.”