Partner Income Test for Age Pension & DSP 2026: How Your Partner's Earnings Cut Your Payment

If you're partnered and receive the Age Pension or Disability Support Pension, Centrelink doesn't look at your income alone — it assesses the combined income of you and your partner, and if that combined income is above a set free area, your own pension starts to reduce. This is the partner income test, and it's the single most misunderstood part of the pension system for couples.

Here's the critical point most people miss. Even if you earn nothing, your partner's employment income, investment income, or rental income can reduce your pension. It doesn't matter whose name the income is in. A retired wife on the Age Pension whose husband still works can lose hundreds of dollars per fortnight simply because of his wages — and the wife often doesn't understand why her payment is lower than her single friends who receive the same base rate.

The test applies equally to:

• Age Pension (both members of the couple)
• Disability Support Pension
• Carer Payment
• JobSeeker Payment (with some variations)
• Parenting Payment

And it applies whether you're legally married, in a registered relationship, in a de facto relationship (heterosexual or same-sex), or any arrangement Services Australia considers to be a "member of a couple." The test doesn't care about marital status — it cares about whether you share finances, accommodation, and commitments with another adult.

If you're unsure whether Centrelink considers you partnered, the five factors they use are financial aspects, nature of the household, social aspects, sexual relationship, and nature of the commitment. This is assessed case-by-case. Living together alone does not automatically make you a couple for social security purposes — nor does being legally married automatically disqualify you if you genuinely live separately.

For the Age Pension and DSP, the couple income test has a combined income free area and a taper rate. As at March 2026 the figures are:

Measure	Couple combined (2026)
Income free area (combined)	$380 per fortnight
Taper rate	50 cents per $1 above the free area
Work Bonus offset (per person, if of pension age)	$300 per fortnight of employment income
Max couple pension (combined, incl. supplements)	approximately $1,732 per fortnight
Income cut-off (pension reduces to zero)	approximately $3,844 per fortnight combined

The taper rate of 50 cents applies to pensions specifically. For JobSeeker Payment the taper is different (60 cents), and for Parenting Payment Single it's different again. This guide focuses on the Age Pension and DSP because those are where partner income test questions are most common.

The Work Bonus is a concession for pension-age recipients — if either you or your partner is over Age Pension age and still working, the first $300 per fortnight of employment income for that person is ignored entirely. It doesn't count toward the combined assessable income. Investment income, rental income, and superannuation income streams don't get the Work Bonus — only wages, salary, and self-employment earnings.

Critical nuance: the reduction is split equally between partners. If the partner income test reduces the couple's combined pension by $200 per fortnight, that's $100 less to each partner's own payment — not $200 off one and nothing off the other. Both pensions move together.

Let's run through three concrete scenarios with the actual arithmetic.

Scenario 1: One partner retired, other partner earning $500/fortnight from part-time work.

Margaret (68) is on the Age Pension; John (66) works two days a week earning $500/fortnight. Margaret has no income. John is over Age Pension age so gets the Work Bonus.

• John's employment income: $500/fortnight
• Less Work Bonus: $500 − $300 = $200 assessable
• Combined assessable income: $200
• Combined free area: $380
• Income above free area: $0 (below the free area)
• Pension reduction: $0

No impact. The Work Bonus absorbs most of John's income and they stay under the free area.

Scenario 2: One partner retired, other partner earning $1,500/fortnight.

Same couple, but John works three days and earns $1,500/fortnight.

• John's employment income: $1,500/fortnight
• Less Work Bonus: $1,500 − $300 = $1,200 assessable
• Combined assessable income: $1,200
• Combined free area: $380
• Income above free area: $820
• Pension reduction (50c on the dollar): $820 × 0.50 = $410 per fortnight
• Split between Margaret and John: $205 each off their individual pension

Margaret's own pension drops by $205/fortnight because of John's wages, even though she isn't working at all. This is where the surprise hits.

Scenario 3: One partner retired, other partner earning $3,000/fortnight.

John is now working full-time as a consultant earning $3,000/fortnight.

• John's employment income: $3,000/fortnight
• Less Work Bonus: $3,000 − $300 = $2,700 assessable
• Combined assessable income: $2,700
• Combined free area: $380
• Income above free area: $2,320
• Pension reduction: $2,320 × 0.50 = $1,160 per fortnight
• Max couple pension: ~$1,732
• Remaining combined pension: $1,732 − $1,160 = $572 per fortnight combined ($286 each)

Margaret's pension is now reduced to $286 per fortnight — a two-thirds cut — purely because of John's income. At around $3,844 per fortnight combined income, the pension cuts out entirely. Many couples in this income range stop receiving any pension even though one partner has fully retired and has no income of their own.

The partner income test captures most forms of income your partner receives, but not everything. Here's the breakdown.

Counted as assessable partner income:

• Wages and salary from employment (reduced by Work Bonus if your partner is pension-age)
• Self-employment and business income (net profit, not gross turnover)
• Rental income from investment properties (net of allowable deductions)
• Interest and dividends from investments outside super
• Deemed income on financial assets (bank accounts, shares, managed funds)
• Overseas pensions your partner receives
• Account-based pension payments (if account-based pension commenced after 1 January 2015, under the deeming regime)
• Taxable income from a trust your partner controls or benefits from

NOT counted as assessable partner income:

• Superannuation balances your partner has but hasn't started drawing from (if under Age Pension age)
• Payments from certain pre-2015 account-based pensions grandfathered under the old rules
• Lump sum inheritances (though once deposited, the deeming rules kick in on the balance)
• Compensation for personal injury (in most cases)
• Gifts from family (subject to the gifting rules on the receiving spouse)
• Centrelink payments your partner themselves receives (you don't double-count their pension against yours)

The biggest planning opportunity here is the treatment of superannuation balances for under-pension-age partners. If Margaret is 68 and on the pension but John is 62 and has $500,000 in super that he hasn't started drawing down, the $500,000 is not counted against Margaret's pension. Once John turns 67 (Age Pension age) his super becomes deemed as a financial asset whether he's drawing from it or not — so the favourable treatment ends.

Many couples time their retirement decisions around exactly this rule. The younger partner keeps super in accumulation phase while the older partner claims the pension, maximising the household's combined income. It's legal, it's well-understood by Services Australia, and it's arguably the most important planning move for couples with a significant age gap.

A few practical strategies that work within the rules.

1. Use the Work Bonus for both partners if both are pension age and both work. If you and your partner are both over Age Pension age, and you both do some part-time work, you each get a $300/fortnight Work Bonus. That's $600 of employment income ignored before the taper even starts. Splitting work across both partners rather than concentrating it in one is almost always better.

2. Time income drawdowns to years when the other partner is already on the pension. If one partner is 70 and on the pension and the other is 62 and has a business that can control its profit timing, lower-income years for the business equal higher pensions for the household. The partner income test is assessed in real time (fortnightly), so income lumps in a single fortnight can produce pension reductions even if the yearly average would have been fine.

3. Keep the younger partner's super in accumulation. As above — super balances of a partner under Age Pension age are invisible to Centrelink. Don't start an account-based pension on the younger partner's super until you have to.

4. Consider the separation question seriously and honestly. If you and your partner genuinely live separately — different households, separate finances, no pooled resources — you may be assessed as single by Services Australia, and the partner income test goes away. This is not a gaming technique; Centrelink investigates suspected false claims of separation vigorously and penalties for fraud are severe. But if the circumstances are genuine, the financial impact of being assessed as single versus partnered is significant and worth discussing openly with Services Australia.

5. Use our Centrelink Partner Calculator. Our partner income test calculator lets you enter your partner's expected income (wages, investments, rent) and your own, and shows you exactly how much of your pension will be paid each fortnight. It's the fastest way to model different scenarios before making employment or retirement decisions.

The partner income test is one of the hardest parts of the system to feel your way through, because the numbers compound. A $500 change in one partner's weekly income can translate to a $200+ change in fortnightly pension for the other partner. Run the numbers before you agree to take on extra shifts, start a new business, or rent out the spare room — and you'll never be caught by surprise on the next pension review.