Age Pension Income Test Explained

Services Australia thresholds with worked taper examples

Free Areas, Taper and Cut-Offs

Services Australia applies the lower of your income-test and assets-test pensions. Under standard rules from July 2026, singles keep full pension to $226/fortnight, couples to $396 combined; each dollar above reduces pension by 50c (single) or 25c each (couple). Part pension cuts out at $2,627.80 single and $4,016.80 couples combined, higher with Rent Assistance or Work Bonus balances. Transitional pensioners (pre-September 2009) use 40c/20c taper with cut-offs $2,670.25 single and $4,340 couples. Blind pensioners are exempt from the income test except for Rent Assistance or partner-payment interactions.

Situation	Free area/fn	Taper	Cut-off/fn
Single standard	$226	50c	$2,627.80
Couple combined	$396	25c each	$4,016.80
Single transitional	$226	40c	$2,670.25

Couple Worked Example (Combined $1,000/fortnight)

Couple combined $1,000 work income with $2,000 Work Bonus balance available: assessable $1,000 minus $300 Bonus shelter and $396 free area equals $304 excess, reducing each pension by $76/fortnight (25c each). Without Bonus history the excess is $604, costing $151 each — a $150/fortnight swing from understanding one rule. Your SOA should state Bonus balances explicitly before recommending additional work, TTR pensions, rental strategies or deemed-asset switches that lift assessable income. Report income and asset changes within 14 days; overpayments raise recoverable debts against future pension, while under-reporting can affect backpay and compliance reviews.

What Counts as Income (and Deeming)

Employment, business, rental, reportable super contributions, foreign pensions and deemed income from financial assets all count. Exempt amounts are narrow — principally approved scholarships, some disaster payments and board payments for foster care — so assume assessability and check the Payment Finder rather than guessing. Gifting above $10,000 yearly or $30,000 over five years stays assessable as deprived assets for five years, and account-based pension deductible components need fund splits — both routinely surprise retirees whose advisers modelled only headline income.

Deeming assumes 0.25% to $60,400 single ($100,200 couple) then 2.25% regardless of actual earnings — low-rate cash still assessed at deeming rates. Account-based pension drawdowns have deductible-amount rules; salary-sacrificed super counts. See our deeming guide and gifting rules for interacting tests.

How Income and Assets Tests Combine

Services Australia pays the lower of your income-test and assets-test pensions — passing one test means nothing if the other zeroes you. Homeowner singles keep full pension to $333,000 assets ($600,000 non-homeowner) with part-pension cut-offs $733,500/$1,000,500 from July 2026 (indexed March/September for part rates); couples combined $499,000/$766,000 full and $1,102,500/$1,369,500 part. A retiree with $500,000 financial assets deemed at 0.25%/2.25% plus $20,000 rental income can fail the income test while passing assets, or vice versa with an illiquid property. Advice that models only super balances without deeming, gifting deprivation ($10,000/yr, $30,000/5yr) and drawdown deductibles misstates entitlements — demand both-test modelling with current Payment Finder figures.

Work Bonus Worked Example

Single pensioner earning $526/fortnight from work with no other income: first $300 sheltered by Work Bonus, assessable $226 — exactly the free area, so full pension retained. At $726 work income, assessable $426, excess $200, pension reduced $100/fortnight. Unused Bonus accrues to $11,800. Your SOA should model Bonus balances before recommending extra work or TTR income that could needlessly cut pension — check your SOA free.

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Frequently Asked Questions

Which test applies if both reduce pension?
The lower resulting pension applies. Model income and assets together every review.

Do super drawdowns count?
Partly — deductible amounts and deeming interact. Get the fund's assessable split, not the gross drawdown.

What if I exceed the cut-off one fortnight?
$0 that fortnight; entitlement resumes when income falls, subject to reporting and residency.

Where are limits updated?
Full free areas each July; part-pension cut-offs March/September. Confirm current figures via the Services Australia Payment Finder before acting, as thresholds index periodically.

How do I check my Work Bonus balance?
Via Centrelink online, the Express Plus app or Services Australia phone self-service. Balances accrue from unused $300 fortnightly concessions to $11,800 — quote the balance in any SOA review so work recommendations use the shelter correctly.