Как контролировать состояние инвалидности входных данных HTML с помощью Javascript

disabled — это атрибут, поэтому вы можете установить его:

document.getElementById("myId").setAttribute('disabled', '');

И чтобы включить элемент:

document.getElementById("myId").removeAttribute('disabled');

Ваша первая функция будет выглядеть так:

function switch_monthlyexpense()
{
    document.getElementById("monthlyexpenses").removeAttribute('disabled');
    document.getElementById("monthlypexpenses").setAttribute('disabled', '');

}

<script>
// use a variable to note which one is disabled
let selected = "monthlyexpenses"

function switchDisabled () {
    // toggle the from "monthlyexpenses" to "monthlypexpenses" or vice versa
    selected = selected === "monthlyexpenses" ? "monthlypexpenses" : "monthlyexpenses"
    
    // check if the DOM disabled state is the same as the selected
    document.getElementById("monthlyexpenses").disabled = selected === "monthlyexpenses";
    document.getElementById("monthlypexpenses").disabled = selected === "monthlypexpenses";

}

</script>

<button class = "btn btn-primary" onclick = "switchDisabled()" id = "switch-button">Switch</button>

<form id = "expenses_form" style = "visibility:visible;">
   <div class = "form-group">
   <div class = "form-group col-md-1">
      <label for = "monthlyexpenses" id = "monthlyexpenseslabel">Monthly Expenses</label>
      <input type = "number" class = "form-control" id = "monthlyexpenses" placeholder = "0" disabled>
   </div>
       <span class = "input-group-text" id = "dsign5">$</span>
</form>



<form id = "pexpenses_form" style = "visibility:visible;">
   <div class = "form-group">
   <div class = "form-group col-md-1">
      <label for = "monthlypexpenses" id = "monthlypexpenseslabel">Monthly P Expenses</label>
      <input type = "number" class = "form-control" id = "monthlypexpenses" placeholder = "0">
   </div>
       <span class = "input-group-text" id = "psign4">%</span>
</form>