How Much Can I Earn on the Age Pension 2026? Income Test Explained Simply
Plain English guide to the Age Pension income test. How much you can earn, deeming rates, Work Bonus, and how employment income affects your pension payment.
The Short Answer
As a single Age Pensioner, you can earn up to $204 per fortnight from all sources (including deemed income from investments) before your pension starts reducing. But here's the good news — if you're working, the Work Bonus lets you earn an additional $300 per fortnight from employment before it's counted as income. That means a working single pensioner can effectively earn $504 per fortnight ($13,104 per year) without any reduction to their pension. For couples, the income free area is $360 per fortnight combined, plus the Work Bonus of $300 each ($600 combined). The Age Pension doesn't cut out until your income reaches approximately $2,436.60 per fortnight for singles or $3,725.60 combined for couples. These thresholds are significantly more generous than those for JobSeeker or Youth Allowance.
The Income Free Area
The income free area for a single pensioner is $204 per fortnight. For a couple combined, it's $360 per fortnight. Any income up to these amounts has zero effect on your pension — you receive the full rate. The income free area includes all assessable income: employment income (after Work Bonus), deemed income from financial assets, rental income, superannuation income streams, overseas pensions, and any other regular income. One-off amounts like the sale of your home or an inheritance may affect the assets test rather than the income test. If both the income test and assets test apply, Centrelink uses whichever test produces the lower pension amount. This means even if you pass the income test, your assets could still reduce your pension, and vice versa.
The Work Bonus — Free Money for Working Pensioners
The Work Bonus is a game-changer for pensioners who do any paid work. It allows you to earn up to $300 per fortnight from employment, self-employment, or a combination before that income is counted in the pension income test. The Work Bonus only applies to gainful employment — not to investment income, rental income, or superannuation income streams. You can also bank unused Work Bonus amounts. If you don't work in a fortnight, your $300 accrues into a Work Bonus balance, up to a maximum of $7,800. So if you haven't worked for 6+ months and then pick up a one-off job paying $5,000, your Work Bonus balance would offset most or all of that income. New Age Pension recipients start with a $4,000 opening Work Bonus balance. The Work Bonus is applied before the income free area, maximising the amount you can earn tax-free from Centrelink's perspective.
Deeming Rates — How Investment Income Is Calculated
Centrelink doesn't look at how much your investments actually earn. Instead, they apply 'deeming rates' — fixed percentages applied to the value of your financial assets to calculate a deemed income amount. As of March 2026, the deeming rates are: 0.25% per year on the first $60,400 of financial assets for singles ($100,200 for couples combined), and 2.25% per year on anything above that threshold. Financial assets that are deemed include bank accounts, term deposits, shares, managed funds, superannuation account-based pensions, and some income streams. For example, if you're single with $200,000 in financial assets, your deemed income would be: $60,400 × 0.25% = $151 plus $139,600 × 2.25% = $3,141 = $3,292 per year or $126.62 per fortnight. This is assessed as income regardless of what those investments actually earn.
Taper Rate — How Your Pension Reduces
Once your total assessable income (after Work Bonus) exceeds the income free area, your pension reduces by 50 cents for every dollar over the threshold. This is the taper rate. For singles: pension reduces by 50 cents per dollar over $204 per fortnight. For couples combined: pension reduces by 50 cents per dollar over $360 per fortnight (split between partners). The maximum Age Pension for a single person is $1,116.30 per fortnight. At a 50-cent taper, the pension cuts out when income reaches approximately $2,436.60 per fortnight for singles. At that point, you'd be earning enough that you probably don't need the pension anyway — but you would lose the Pensioner Concession Card 12 weeks after your pension cancels. To keep the PCC, you'd need to stay on at least $1 of pension per fortnight.
Worked Examples With Real Numbers
Example 1 — Working part-time: You earn $600 per fortnight from employment and have $100,000 in the bank (deemed at $126.62/fortnight). Work Bonus offsets $300 of employment income. Assessable income: $300 (work) + $126.62 (deemed) = $426.62. Less income free area of $204 = $222.62 over threshold. Pension reduction: $222.62 × 0.50 = $111.31. You receive $1,116.30 - $111.31 = $1,004.99 per fortnight. Example 2 — Not working, has investments: You have $400,000 in financial assets. Deemed income: $60,400 × 0.25% + $339,600 × 2.25% = $151 + $7,641 = $7,792/year = $299.69/fortnight. Less income free area of $204 = $95.69 over threshold. Pension reduction: $95.69 × 0.50 = $47.85. You receive $1,116.30 - $47.85 = $1,068.45 per fortnight. Use our Age Pension calculator for your exact figure.
Rental Income, Overseas Pensions, and Other Income Types
Rental income from investment properties is assessed as income for the pension income test. It's calculated as gross rent minus allowable expenses (rates, insurance, repairs, property management fees, mortgage interest). The net figure is your assessable rental income. Overseas pensions are generally assessed as income and may also count as an asset. If you receive a pension from another country, Centrelink will assess the gross amount in Australian dollars. This applies to UK State Pension, US Social Security, NZ Superannuation, and other foreign pensions. Superannuation account-based pensions are subject to deeming rules — the account balance is a financial asset and deemed accordingly. Defined benefit super pensions are assessed differently: the gross income stream minus a deductible amount is your assessable income. Annuities and other income streams may have special assessment rules depending on when they were purchased.
Tips to Maximise Your Pension While Earning
First, take advantage of the Work Bonus. If you can do any paid work, the $300 per fortnight exemption is effectively free money — you keep both your wages and your full pension up to that amount. Second, consider the timing of investment withdrawals. Deemed income is based on the balance of your financial assets, so reducing your financial assets (for example, by paying off debt or making home improvements) can lower your deemed income and increase your pension. Third, if you're close to the income threshold, check whether restructuring your investments could help — moving money from a bank account (deemed) into your home (exempt) is a legitimate strategy. Fourth, always report income changes promptly — overreporting can mean you miss out on payments, while underreporting creates debts. Use our Age Pension calculator to model different scenarios and find your optimal income level.
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General information and estimates only — not financial, tax, or legal advice. Always verify with Services Australia.
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