Wondering how much you can earn without losing your Age Pension in 2025? For Australian retirees, understanding the Centrelink income test is key to maximizing your pension while staying financially secure. This guide breaks down the 2025 income limits, what counts as income, and how to manage your finances to keep your pension intact. Let’s dive in!
What Is the Age Pension Income Test?
The Age Pension income test is part of Centrelink’s means test to determine your pension eligibility and payment rate. It looks at your gross income (before tax) from all sources, including your partner’s income if you’re in a couple.
If your income exceeds certain thresholds, your pension reduces by 50 cents for every dollar over the limit, until it reaches zero at the upper cutoff. You must also pass the assets test, meet age requirements (67), and satisfy residency rules to qualify.
2025 Income Limits for the Age Pension
Centrelink sets specific income thresholds to determine whether you receive a full or part pension. These limits are reviewed three times a year (March, July, September) based on the Consumer Price Index (CPI). Here are the 2025–26 limits:
Income Limits for a Full Age Pension
| Situation | Fortnightly Limit | Annual Limit (Approx.) |
|---|---|---|
| Single | $218 | $5,668 |
| Couple (Combined) | $380 | $9,880 |
| Illness-Separated Couple | $380 | $9,880 |
Income Limits for a Part Age Pension
| Situation | Fortnightly Limit | Annual Limit (Approx.) |
|---|---|---|
| Single | $2,575.40 | $66,960 |
| Couple (Combined) | $3,934.00 | $102,284 |
| Illness-Separated Couple | $5,095.00 | $132,465 |
If your income is below the full pension limit, you get the maximum rate. Above it, your pension reduces gradually until it cuts off at the part pension limit.
What Income Counts Toward the Test?
Centrelink counts most types of income, including:
- Employment Income: Wages or self-employment earnings (after applying the Work Bonus).
- Investment Income: Deemed income from savings, super, shares, or other financial assets.
- Rental Income: Net income from properties you rent out.
- Super Contributions: Voluntary or above-standard contributions.
- Business Income: Profits from running a business.
- Overseas Income: Converted to Australian dollars.
- Certain Lump Sums: Like redundancy payouts or family trust distributions.
What Income Is Excluded?
Some income doesn’t count, such as:
- Most government benefits (e.g., one-off Centrelink bonuses).
- Regular gifts from close family.
- Lump sums like inheritances, insurance payouts, or lottery wins.
The Work Bonus: Extra Help for Working Retirees
If you’re still working, the Work Bonus lets you earn up to $300 per fortnight without it counting toward the income test. Any unused portion of this $300 can accumulate up to a $11,800 cap, giving you flexibility to earn more without reducing your pension. This is a great perk for retirees who want to stay active in the workforce.
How Deeming Rates Affect Your Income
Centrelink uses deeming rates to estimate income from financial assets like savings or shares. For 2025, these rates apply:
- Lower Rate: 0.75% for assets under $64,200 (single) or $106,200 (couple).
- Upper Rate: 2.75% for assets above these thresholds.
For example, if you have $100,000 in savings, the deemed income (not actual earnings) is calculated and added to your income test. Mortgages on your home don’t reduce this deemed income.
Why the Income Test Matters
The income test ensures the Age Pension supports those who need it most. Earning too much could reduce or even cancel your pension, so it’s crucial to understand your limits. Report any income changes to Centrelink within 14 days to avoid overpayments, which you may need to repay.
How to Check Your Pension and Income
Stay on top of your pension with these steps:
- Log into myGov: Check your Centrelink account for payment and income details.
- Use the Express Plus Centrelink App: A quick way to monitor your status.
- Contact Services Australia: Get personalized advice if you’re unsure about your situation.
Updating your income details promptly helps ensure accurate payments and avoids surprises.
What You Should Do Now
To maximize your Age Pension:
- Track Your Income: Monitor all sources to stay within the limits.
- Use the Work Bonus: If working, take advantage of the $300 fortnightly exemption.
- Report Changes: Notify Centrelink within 14 days of any income changes.
- Review Assets: Check how deeming rates affect your pension if you have investments.
If you’re nearing pension age, contact Services Australia to assess your eligibility and plan ahead.
Why This Matters for Retirees
The 2025 Age Pension income test helps balance support for retirees with financial fairness. By understanding the rules, you can earn income without losing your pension and plan your retirement with confidence. Stay informed, keep your details updated, and make the most of your entitlements.
FAQs About the 2025 Age Pension Income Test
How much can I earn before my Age Pension reduces in 2025?
Singles can earn up to $218 per fortnight ($5,668 annually) for a full pension. Above this, your pension reduces by 50 cents per dollar until it cuts off at $2,575.40 fortnightly ($66,960 annually).
Does my partner’s income affect my pension?
Yes, for couples, combined income up to $380 per fortnight ($9,880 annually) qualifies for a full pension, with reductions above this limit.
What is the Work Bonus?
It allows you to earn up to $300 per fortnight from work without it counting toward the income test, with unused amounts accumulating up to $11,800.
Do I need to report income changes?
Yes, report any changes within 14 days to Centrelink to avoid overpayments.
Does a mortgage reduce my deemed income?
No, mortgages on your home don’t affect deemed income from financial assets.
How often are income limits reviewed?
Limits are reviewed three times a year (March, July, September) based on CPI changes.