In this guide
- What Counts as Income Under the 2026 Age Pension Test
- 2026 Age Pension Income Test Thresholds at a Glance
- How the Income Test Taper Rate Works
- Income Test vs Assets Test: Which One Applies to You?
- The Work Bonus: Earn More Without Losing Pension
- FAQ
- Getting the Right Test — and the Right Strategy
The Age Pension income test 2026 counts four things as income: money you earn from work, “deemed” income from your bank accounts and investments, income from investment properties or dividends, and superannuation income stream payments.
Centrelink assumes your financial assets earn a set rate, regardless of what they actually pay you.
As a single person, your pension starts reducing once your combined income passes $226 a fortnight.
It cuts out entirely at $2,627.80 a fortnight. Couples share a combined free area of $396 a fortnight, and their pension cuts out at $4,016.80 combined.
Your home stays exempt. Super held before you reach Age Pension age stays invisible to Centrelink too.
That’s the short answer.
But the income test rarely works alone. It interacts with the assets test, the Work Bonus, and Centrelink’s deeming rules in ways that trip up even switched-on retirees. Here’s how the 2026 income test actually works, step by step.
What Counts as Income Under the 2026 Age Pension Test
Centrelink groups your income into a few categories, and it treats each one differently.
Employment and self-employment income. Centrelink counts your wages, salary, and business income in full. It also averages employment income over a 90-day period, rather than assessing it fortnight by fortnight.
That matters if you work irregular hours or take on seasonal contract work.
Deemed income from financial assets. This is the category that catches people out. Centrelink doesn’t ask what your bank accounts, term deposits, shares, or managed funds actually earned. Instead, it deems a set rate of return and counts that figure as income — whether your money earned more, less, or nothing at all.
Right now, Centrelink deems the first $64,200 of a single person’s financial assets to earn 1.25%. It deems anything above that threshold to earn 3.25%.
For couples, the lower rate applies to the first $106,200 combined.
Once you reach Age Pension age, Centrelink folds your superannuation balance into this deeming calculation too, even if you haven’t started drawing an income from it.
Rental and investment income. Centrelink assesses your net rental income, dividends, and interest as actual income, wherever deeming doesn’t already capture them.
Superannuation income streams. Specific rules govern account-based pension payments. These rules account for the return of your own capital, so Centrelink doesn’t count every dollar you draw down as assessable income.
What Centrelink excludes. Your principal home stays completely exempt. And if you haven’t yet reached Age Pension age, Centrelink can’t see your partner’s superannuation balance until they do either.
2026 Age Pension Income Test Thresholds at a Glance
| Situation | Income free area (per fortnight) | Cut-off point (per fortnight) |
|---|---|---|
| Single | $226 | $2,627.80 |
| Couple, combined | $396 | $4,016.80 |
Below the free area, your income doesn’t touch your pension at all — assuming you also pass the assets test.
Above it, your payment tapers down gradually until it hits the cut-off point. Past that point, no pension is payable under the income test.
These figures reflect the settings current from 1 July 2026.
Services Australia reviews the underlying income test rules every year on 1 July, and it indexes payment rates twice a year, on 20 March and 20 September.
Mark 20 September 2026 on your calendar — that’s the next date these numbers could shift.
Age Pension income test 2026 thresholds table for singles and couples
| Family Status | Income-Free Area (Full Pension) | Part-Pension Cut-Off Point (Fortnightly) | Part-Pension Cut-Off Point (Annualized) |
| Single | Up to $218 per fortnight | $2,619.80 per fortnight | Approx. $68,115 per year |
| Couple (Combined) | Up to $380 per fortnight | $4,000.80 per fortnight | Approx. $104,020 per year |
How the Income Test Taper Rate Works
Once your income passes the free area, your pension doesn’t disappear straight away. It tapers off gradually instead.
For singles, Centrelink reduces your pension by 50 cents for every dollar you earn above $226 a fortnight.
For couples, Centrelink reduces each partner’s pension by 25 cents for every dollar of combined income above $396.
Worked example: Picture a single retiree earning $300 a fortnight in assessable income.
That’s $74 above the $226 free area. At 50 cents per dollar, Centrelink trims their pension by $37 a fortnight.
Income Test vs Assets Test: Which One Applies to You?
This is where most people get confused. Centrelink runs both the income test and the assets test every time.
It pays you based on whichever test produces the lower amount. You don’t get to choose, and passing one test comfortably won’t protect you from the other.
If you hold substantial assets but modest income — a large super balance you haven’t started drawing from heavily, for example — the assets test usually limits your pension.
If you hold modest assets but higher income, from part-time work or larger super drawdowns, the income test more often becomes the binding constraint.
This explains why restructuring your assets doesn’t always increase your pension.
If the income test already limits your payment, shuffling assets around to satisfy the assets test may change nothing.
Getting this interaction wrong is easy. Getting it right just takes the correct advice.
The Work Bonus: Earn More Without Losing Pension
Still working a few shifts a week in retirement?
The Work Bonus ranks among the most under-used concessions in the whole system. It lets you earn up to $300 a fortnight from employment income without Centrelink counting any of it toward your income test.
Unused Work Bonus amounts roll forward too, building an “income bank” worth up to $11,800.
If you don’t use your full $300 fortnightly exemption, the leftover carries into future fortnights.
That suits retirees who pick up seasonal or irregular work — a lump sum of casual earnings later in the year can draw down against an income bank you built up during quieter months.
Frequently Asked Questions
Getting the Right Test — and the Right Strategy
The income test and assets test rarely tell the same story, and the gap between them is exactly where good advice earns its kee.
Whether the right move is adjusting how your super is drawn down, restructuring investments, or simply understanding which test genuinely applies to your circumstances, it’s rarely something a generic online calculator gets right.
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General Advice Warning: This article contains general information only and does not take into account your individual objectives, financial situation, or needs. Before making any financial decisions, you should consider whether the information is appropriate to your circumstances and seek personal financial advice. Nasser Zreika and Lincoln Wealth Advisers are Authorised Representatives of Synchron, AFS Licence No. 243313.