PURPOSE Prior studies examining the connection between disposable income and adolescent smoking often yielded mixed results, partly due to the lack of consideration for contextual variables. In the present study, we sought to broaden understanding of disposable income on adolescent smoking behaviors via both absolute and relative perspectives in the school context. METHODS We obtained data from the 2010 Global Youth Tobacco Survey (GYTS) in Taiwan. Information concerning sociodemographics, disposable income, smoking history, and contextual smoking exposure (e.g., school) were assessed via self-report. Recent-onset smokers were defined as those who had their first cigarette within two years of the survey. Complex survey and multilevel analyses were carried out to estimate association. RESULTS Adolescents with higher monthly disposable income were 2∼5 times more likely to start smoking and become regular smokers. Having the least disposable income in a class appeared linked with increased risk of tobacco initiation by 40% (95% confidence interval [CI]: 2%-91%). Pupils' odds to start smoking were lowered to .70 when the majority of schoolmates had low disposable income (95% CI: .51-.99). CONCLUSIONS Adolescent risk of smoking initiation may be differentially affected by individual- and contextual-level absolute and relative disposable income. Future research is needed to delineate possible mechanisms underlying unfavorable health behaviors associated with disposable incomes in early adolescence.