The Income test is one of two means tests that decide whether you can get the Age Pension and how much you receive. The other is the Assets test. To qualify, you also need to reach Age Pension age and meet the residency requirements.
Services Australia works out your pension under both tests, and the test that results in the lower pension determines your rate of payment.
This guide explains the Income test: what counts as income, how much you can have before your pension starts to reduce, and the cut-off points that apply from 20 September 2026.
What counts as income for the Income test?
You do not need a job to have income in the eyes of Services Australia. Income that is counted includes:
- wages and self-employment income
- deemed income from financial investments, such as bank accounts, term deposits, shares and superannuation once you reach Age Pension age
- rent from an investment property or from boarders
- payments from some income streams, such as defined benefit pensions and annuities
- pensions from other countries
- distributions or dividends from a private company or trust.
Dividends and interest from your financial investments are not counted directly. Instead, the investments are deemed to earn a set rate of income, whether or not they actually earn that much. If you are a member of a couple, the Income test looks at your combined income.
How much income can I earn?
You can have a certain amount of income each fortnight and still get the full pension. This is known as the income free area. Above it, your pension reduces until it stops at the cut-off point.
| Living arrangement | Income free area per fortnight | How much your pension reduces above this amount |
|---|---|---|
| Single person | Up to $226 | 50 cents for each dollar over $226 |
| Couple living together or apart due to illness | Up to $396 combined | 50 cents for each dollar over $396 (25 cents each) |
Source: Department of Social Services. Income free areas apply from 1 July 2026.
For example, a single person with income of $426 a fortnight is $200 over the income free area. The Income test reduces their pension by $100 a fortnight, from the maximum of $1,237.70 to $1,137.70. If the Assets test gives a lower rate, that rate applies instead.
Income cut-off points per fortnight from 20 September 2026:
| Living arrangement | Your pension stops if your income is more than this per fortnight |
|---|---|
| Single person | $2,701.40 |
| Couple living together | $4,128.00 combined |
| Couple living apart due to illness | $5,346.80 combined |
Source: Department of Social Services. Cut-off points apply from 20 September 2026.
Higher cut-offs can apply if you receive Rent Assistance. If you work, the Work Bonus also means you can earn more than these amounts before your pension stops.
The income free areas are indexed on 1 July each year. The cut-off points are reviewed in March, July and September and can change when the income free areas or Age Pension rates change.
The Work Bonus
The Work Bonus means the first $300 of eligible work income each fortnight is not counted under the Income test. It sits on top of the income free area, so a single pensioner whose only income is from work can earn $526 a fortnight ($226 plus $300) and still receive the full pension.
If you earn less than $300 from work in a fortnight, the unused amount builds up in a Work Bonus balance, up to $11,800. That balance is used to offset work income in later fortnights. For example, if you have built up the full $11,800 balance and then earn $5,000 in one fortnight, the first $300 is covered by the fortnightly Work Bonus and the remaining $4,700 comes off your balance. None of the $5,000 is assessed under the Income test.
The Work Bonus is applied automatically.
What is deemed income?
Services Australia assumes your financial investments earn a set rate of income, regardless of what they actually earn. This is called deeming. It applies to bank accounts, term deposits, shares, managed investments, account-based pensions and superannuation once you reach Age Pension age.
From 20 September 2026, the first $66,800 of a single person’s financial investments is deemed to earn 1.75% a year, and anything above that is deemed to earn 3.75%. For a couple, the lower rate applies to the first $110,600 of their combined financial investments.
Only the deemed amount counts under the Income test. If your investments earn more than the deemed rate, the extra is not counted. If they earn less, the deemed amount is still counted.
How does my superannuation affect the Age Pension?
Once you reach Age Pension age, your superannuation in accumulation phase is counted under the Assets test and deemed under the Income test. Account-based pensions are generally treated the same way.
Some account-based pensions that started before 1 January 2015 are assessed under older rules, provided you have received an income support payment continuously since then.
Superannuation belonging to a partner under Age Pension age is generally not counted while it remains in accumulation phase. If their superannuation is paying them an income stream, however, it is generally counted.
Can I get the Age Pension if I have an income stream?
Yes. Having an income stream, such as a superannuation pension or an annuity, does not rule you out of the Age Pension. How it is assessed depends on the type of product and when it started. For example:
- Account-based pensions are generally deemed, as explained above.
- Certain lifetime income streams bought on or after 1 July 2019 receive concessional treatment if they meet the relevant rules. Generally, 60% of payments from these products are counted as income under the Income test.
- Defined benefit pensions and some annuities have their payments counted as income, in some cases less a deductible amount.
Older products can be assessed under different rules. Because the treatment varies, the Financial Information Service is a useful free source of information. You can reach it through the Centrelink Older Australians Line.
What happens if I receive a lump sum while on the Age Pension?
Many one-off lump sums are not counted as income under the Income test. These generally include:
- an inheritance or a lottery win
- other one-off gifts, prizes or rewards
- lump sums withdrawn from superannuation
- gambling wins, unless you gamble for a living
- natural disaster payments
- some redress payments
- a payout from a property settlement.
Once you have the money, it may count as an asset under the Assets test. If it is held in a bank account or another financial investment, it will also generally be subject to deeming under the Income test. Lump sum compensation payments have separate rules and can affect your pension in other ways.
You should tell Services Australia about a lump sum if it could affect your payment or circumstances.
Does the transitional pension rate apply to me?
Transitional pension rules may apply if you were already receiving the Age Pension before 20 September 2009, when the Income test rules changed. They protect pensioners who would otherwise have received a lower payment under the new rules.
From 20 September 2026, the transitional rate stops at income of $2,718.50 a fortnight for a single person and $4,418.00 a fortnight combined for a couple.
Summary
The Income test looks at income from work and other sources, as well as deemed income from financial investments. You can have income up to the income free area without reducing your Age Pension. Above that amount, your pension generally falls by 50 cents for each additional dollar of income until you reach the cut-off point.
Services Australia also applies the Assets test, and whichever test results in the lower pension determines how much you receive.
You do not need to calculate your entitlement yourself, because Services Australia does that for you. Understanding how your income is assessed can make it easier to check your payment and understand why it changes.
The information in this guide is general in nature.