Personal income is defined as the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by place of residence.
Personal income includes the income that is received by persons from participation in production, from government and business transfer payments, and from government interest (which is treated like a transfer payment). It is calculated as the sum of wage and salary disbursements, other labor income, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and transfer payments to persons, less personal contributions for social insurance.
Total income is the sum of income from all sources (government and non-government). It consists of wages and salaries, other labor income, proprietors’ income, rental income of persons, personal dividend income, personal interest income, and transfer payments, less personal contributions for social insurance.
Source: Regional Economic Measurement Division of the Bureau of Economic Analysis (BEA)
Frequently Asked Questions
- What are personal income data used for?
Businesses use the estimates to evaluate markets for the location, expansion, and contraction of their activities. Both state and federal governments use the estimates of total income to evaluate the socio-economic impact of their initiatives.
- What are transfer payments?
Transfer payments are income for which no current service has been performed. It consists of payments to individuals and nonprofit institutions by federal, state, and local governments and by businesses. Examples include retirement and disability insurance benefits, medical benefits (mainly Medicare and Medicaid), income maintenance benefits, unemployment insurance compensation and other government payments.