Age Pension Income Test Calculator: How Much Can You Earn and Still Get the Pension?

If you are approaching retirement or already enjoying your golden years, understanding the Age Pension income test is essential. Many Australians are surprised to learn that they can still work part-time and receive a part Age Pension. The key is knowing exactly how much income you can earn before your pension starts to reduce. This guide explains how the Age Pension income test works for 2025-26, the current thresholds, what counts as income, and practical strategies to make the most of your entitlements.

What Is the Age Pension Income Test?

The Age Pension income test is one of two tests Centrelink uses to decide how much Age Pension you can receive. The other is the assets test. Centrelink applies both tests and pays you based on whichever gives the lower result. Even if you pass the assets test with flying colours, your pension can still be reduced if your income is too high.

The income test looks at how much money you receive from various sources each fortnight. This includes wages from part-time work, rental income, dividends, interest, and deemed income from your financial investments. If your income is below a certain threshold, you receive the full Age Pension. Once your income goes above that threshold, your pension reduces by 50 cents for every extra dollar you earn. Eventually, if your income reaches the cut-off point, your pension payment falls to zero.

For many retirees, the income test is the more restrictive of the two tests. That is why using an Age Pension income test calculator can be so helpful. It gives you a clear picture of where you stand and whether extra work or investment income will affect your pension.

How the Age Pension Income Test Works in 2025-26

In 2025-26, the income test operates on a simple taper rate. For singles, you can earn up to $212 per fortnight before your pension is affected. For couples combined, the threshold is $372 per fortnight. These are the figures where the full pension starts to reduce.

Once your income exceeds these limits, your Age Pension reduces by 50 cents for each dollar over the threshold. This applies to both singles and couples. The reduction continues until your pension reaches zero at the upper income limit. For singles, this cut-off is roughly $2,500 per fortnight. For couples combined, it is around $3,800 per fortnight. Keep in mind these figures include the Work Bonus, which we will explain shortly.

It is also worth noting that the income test thresholds are indexed regularly to keep up with inflation and wage growth. This means the exact dollar amounts can shift slightly throughout the year. Always check the latest figures at servicesaustralia.gov.au or use a reliable calculator to stay up to date.

Age Pension Income Test Thresholds for 2025-26

To make things clearer, here are the main Age Pension income test thresholds that apply in 2025-26. These figures show where the full pension stops and where the pension cuts out completely.

Note: These amounts assume you are not benefiting from the Work Bonus. If you are working, the Work Bonus can raise your effective income threshold significantly. The cut-off figures are also estimates and can vary slightly depending on your pension supplement and energy supplement entitlements. For exact calculations tailored to your situation, use an official Centrelink estimator or speak with a Financial Information Service officer.

If you are still working and planning for retirement, it helps to know how your current earnings translate into long-term savings. Our Take-Home Pay Calculator shows exactly how much you are earning after income tax and other deductions, so you can plan your super contributions more effectively.

What Counts as Income for the Age Pension Test?

Not all money that comes into your bank account is treated the same way by Centrelink. Understanding what counts as assessable income can help you avoid surprises and structure your finances wisely. The main types of income included in the Age Pension income test are:

• Employment income: Wages, salary, commissions, and bonuses from part-time or casual work.
• Deemed income from financial investments: Centrelink applies a deeming rate to your bank accounts, term deposits, shares, and managed funds. This is an assumed rate of return, regardless of what you actually earn.
• Rental property income: Net income from investment properties counts toward the test.
• Superannuation pension payments: If you have started an income stream from your super, those regular payments are assessable income.
• Overseas pensions and some annuities: Many foreign pensions and private annuities are counted in full or in part.
• Distributions from trusts and companies: In some cases, these may also be assessable.

Some types of income are excluded. For example, the HECS-HELP debt itself does not count as income, and most one-off government disaster payments are exempt. Your principal residence is also excluded from the assets test, though any rent you earn from a granny flat arrangement may be assessed differently. If you are unsure about a specific income source, it is always best to confirm with Services Australia.

The Work Bonus: Earn More Without Losing Pension

One of the best features of the Age Pension income test is the Work Bonus. This incentive is designed to encourage pensioners to stay in the workforce. Under the Work Bonus, the first $300 of employment income you earn each fortnight is not counted in the income test. That means a single pensioner could effectively earn up to $512 per fortnight from work ($212 standard threshold plus $300 Work Bonus) before their pension starts to reduce.

If you do not use your full $300 Work Bonus in a particular fortnight, the unused amount can accumulate in a Work Bonus income bank, up to a maximum balance. As of 2025-26, the maximum income bank balance is $11,800. This means if you have not worked for a while and built up a balance, you could earn well above the usual threshold in a future fortnight without affecting your pension.

The Work Bonus only applies to employment income, not to investment income, rental income, or super pension payments. It is a powerful tool for retirees who want to supplement their pension with part-time work while keeping their full entitlements.

How Superannuation and Salary Sacrifice Affect Your Future Pension

Your superannuation balance becomes an assessable asset once you reach Age Pension age, and any income drawn from it counts toward the income test. This means the more super you accumulate, the more it can reduce your Age Pension. However, having a healthy super balance also means you are less reliant on the pension, which gives you more flexibility and financial security in retirement.

For those still in the workforce, contributing extra to super through salary sacrifice can be a smart tax strategy. Salary sacrifice reduces your taxable income, which means you pay less income tax and Medicare levy during your working years. The money goes into your super fund and is taxed at just 15%. Over time, this can significantly boost your retirement savings.

That said, there are caps on how much you can contribute concessionaly each year. For 2025-26, the concessional contributions cap is $30,000. This includes your employer's Super Guarantee contributions, which are currently set at 12% of your ordinary time earnings. You can learn more about how super builds your nest egg on our Superannuation Calculator page.

Balancing super savings against future Age Pension entitlements is a delicate act. Some retirees choose to delay starting a super income stream for as long as possible, allowing their super to grow while they draw the full Age Pension. Others prefer the flexibility of having both income sources from day one. The right approach depends on your personal circumstances, health, and lifestyle goals.

Tips to Maximise Your Age Pension Under the Income Test

If you want to get the most out of your Age Pension while still earning some income, there are several legitimate strategies you can consider. These do not involve complex tax schemes — just smart planning within the rules.

Take advantage of the Work Bonus: If you enjoy working part-time, make sure you understand how the Work Bonus applies to you. Track your employment income carefully and keep an eye on your Work Bonus income bank balance.

Review your investment structure: Because Centrelink uses deeming rates for financial investments, the actual interest or dividends you earn do not matter for the income test. What matters is the value of your investments and the deeming rate applied. Sometimes consolidating accounts or switching to lower-fee products can simplify your finances without changing your pension.

Consider gifting within the rules: You can gift up to $10,000 per financial year (or $30,000 over five years) without it affecting your pension. This can reduce your assessable assets, and in some cases, your deemed income as well. Gifts above these limits may still be counted by Centrelink for five years.

Delay your super income stream: If you do not need to draw from your superannuation immediately, leaving it in the accumulation phase for longer can reduce your assessable income. Once you start a super pension, the payments count toward the income test and the balance counts toward the assets test.

Summary: Plan Ahead for a Better Retirement

The Age Pension income test is a crucial part of Australia's retirement system. It ensures that pension support goes to those who need it most, while still allowing older Australians to earn some income from work and investments. Understanding the thresholds, taper rates, and Work Bonus can help you make informed decisions about when to retire, how much to work, and how to structure your finances.

For 2025-26, singles can earn up to $212 per fortnight and couples up to $372 per fortnight before their pension starts to reduce. With the Work Bonus, employed pensioners can earn even more. The part pension cuts out at roughly $2,500 per fortnight for singles and $3,800 for couples combined. Remember that these figures are updated regularly, so always check the latest information.

Whether you are still working and building your super, or already receiving the Age Pension, having the right tools makes planning easier. Use our Take-Home Pay Calculator and Income Tax Calculator to understand your current earnings, and explore our Superannuation Calculator to plan for the future. A little knowledge goes a long way toward a comfortable and worry-free retirement.