For many Australians approaching retirement, one of the biggest questions is: “How much can I earn before it reduces my Age Pension?” The answer depends on your income, your partner’s income (if applicable), and your overall assets.
The Age Pension income test is one part of Centrelink’s means test. To qualify, you must also pass the assets test, meet the eligibility age, and satisfy residency requirements.
How the Age Pension Income Test Works
Centrelink looks at your gross income (before tax) from all sources in Australia and overseas. If you have a partner, their income is included too.
Your pension reduces by 50 cents for every dollar earned over the threshold until it cuts off completely at the upper income limit.
Current Age Pension Income Limits (2025–26)
Income Limits for a Full Age Pension
| Situation | Fortnightly Limit | Annual Limit* |
|---|---|---|
| Single | $218 | $5,668 |
| Couple (combined) | $380 | $9,880 |
| Illness-separated couple (combined) | $380 | $9,880 |
*Annual amounts are approximate.
If your income is higher, you may still qualify for a part pension.
Income Limits for a Part Age Pension (Residents)
| Situation | Fortnightly Limit | Annual Limit* |
|---|---|---|
| Single | $2,575.40 | $66,960 |
| Couple (combined) | $3,934.00 | $102,284 |
| Illness-separated couple (combined) | $5,095.00 | $132,465 |
What Income Is Counted?
Centrelink includes:
- Employment income (after applying the Work Bonus)
- Investment income (including deemed income from super, bank savings, and shares)
- Rental income (actual amount received)
- Reportable super contributions (voluntary or above SG)
- Business or self-employment income
- Certain lump sums (e.g., redundancy payouts, family trust distributions)
- Overseas income (converted to Australian dollars)
What Income Is NOT Counted?
Some payments and one-off amounts are excluded:
- Most government benefits
- Regular gifts from close relatives
- Lump sums like inheritances, insurance payouts, or lottery wins
The Work Bonus
If you’re still working, you can earn up to $300 per fortnight without it counting toward the income test. Unused bonus amounts can build up to $11,800, giving retirees extra flexibility.
FAQs About the Age Pension Income Test
1. How often do income limits change?
They are reviewed three times a year (March, July, September) based on CPI changes.
2. Do assets affect the income test?
Yes. You must also pass the assets test. The lower result between the two tests determines your final pension rate.
3. Does a mortgage reduce my deemed income?
No. Mortgages on your home do not reduce investment values for deeming purposes.
4. Is overseas income included?
Yes. Centrelink converts foreign income to Australian dollars at current rates.
5. Do defined benefit pensions count?
Yes, but 10% of defined benefit pension income is excluded from the income test.
Key Takeaway
The Age Pension income test ensures support goes to those who need it most. While you can still earn income and keep some or all of your pension, it’s important to report changes within 14 days to avoid overpayments.