Centrelink Income Test Guide

What Is the Centrelink Income Test?

The Centrelink income test is a means-testing formula that reduces your social security payment as your assessable income rises above a set “free area” threshold. Services Australia applies this test to every income-support payment including JobSeeker Payment, Youth Allowance, Age Pension, Parenting Payment, Austudy, and Disability Support Pension.

The test operates on a fortnightly reporting cycle. You report your gross employment income every 14 days, and Centrelink calculates your adjusted payment before the next pay run. Two separate means tests exist — the income test and the assets test — and your payment is set at the lower result of the two. Understanding both is essential for estimating your actual entitlement.

The Australian tax calculator treats Centrelink payments as assessable income for tax purposes. Your payment amount directly affects your take-home pay, so knowing the income test thresholds helps you plan part-time work alongside your benefit.

Work Out Your Own Payment

One page cannot hold every payment's rules, so each has its own calculator built on the figures Services Australia published for 28 August 2026:

• JobSeeker payment calculator — what you keep when you work, with partner income and the $150 / 50c / 60c test.
• Austudy and Youth Allowance calculator — the student income test: $539 free area, 50c to $646, then $53.50 plus 60c.
• Age Pension income test calculator — single and couple tests with the $300-a-fortnight Work Bonus applied.

How Does the Income Test Work?

The Centrelink income test reduces your payment by a fixed number of cents for every dollar you earn above the free area — this reduction rate is the taper rate. Below the free area, your payment remains at the full maximum rate with no reduction.

Most working-age payments use a two-stage taper. JobSeeker Payment, for example, applies a 50-cent taper for each dollar earned between $150 and $256 per fortnight, then increases to a 60-cent taper for every dollar above $256. The Age Pension uses a single 50-cent taper above its free area of $226 per fortnight for singles.

Your payment reaches $0 (the “cut-off point”) once your income exceeds the level where the taper fully absorbs the maximum payment. For a single JobSeeker recipient with no children on the $808.70 maximum paid to 19 September 2026, the published cut-off is $1,530.17 a fortnight; from 20 September 2026 the maximum rises to $824.90 and the cut-off with it, to $1,557.17. Earning above that amount means your fortnightly JobSeeker drops to nil.

What Is the Income Free Area?

The “Income Free Area” is the amount you earn each fortnight before any reduction applies. For JobSeeker and Youth Allowance (job seeker), the free area is $150 per fortnight. For Age Pension (single), it is $226 per fortnight. For Parenting Payment Single, it is $202.60 per fortnight. Earning at or below the free area means your Centrelink payment stays at the full rate.

What Is the Taper Rate?

The taper rate determines how quickly your payment reduces per dollar of income above the free area. A 50-cent taper means you lose 50 cents of payment for every $1 earned. A 60-cent taper means you lose 60 cents. Parenting Payment Single uses a gentler 40-cent taper, reflecting the policy goal of encouraging single parents to re-enter the workforce. You can use our Income Tax Calculator to estimate the combined effect of income tax and taper-rate reductions on your take-home pay.

Current Income Test Thresholds and Rates

Free areas, tapers, maximum fortnightly rates and the cut-off (the income at which the payment reaches $0) for the main payments. Verified at Services Australia on 28 August 2026; JobSeeker and Age Pension are indexed on 20 March and 20 September, the student payments on 1 January. The last column carries the 20 September 2026 figures, published in the DSS rates list on 20 August 2026 — the March rates in the columns before it are the ones actually paid until 19 September 2026.

Cut-offs for JobSeeker and the student payments include the Energy Supplement, which not every recipient gets, so the payment in our calculators reaches $0 slightly below them. Age Pension totals already include the Pension and Energy Supplements. The 20 March 2026 cut-offs are Services Australia's published figures; the 20 September 2026 cut-offs are calculated from the published DSS rates and the unchanged tapers, because Services Australia publishes its September cut-offs on the day. Parenting Payment, Carer Payment and Disability Support Pension are not covered here — check their Services Australia pages.

What Counts as Assessable Income for Centrelink?

Assessable income for Centrelink purposes includes all gross employment income, investment returns, and certain other receipts — broadly any money that increases your capacity to support yourself.

Income Types That Are Counted

• Employment income — wages, salary, commissions, bonuses, overtime, and penalty rates paid by an employer
• Self-employment income — net business profit after allowable deductions
• Investment income — bank interest, share dividends, managed fund distributions, and rental income
• Overseas income — any income earned from overseas sources, converted to AUD
• Superannuation income streams — account-based pensions and annuity payments if you are of Age Pension age
• Deemed income — income assumed from financial assets using the deeming rate, regardless of actual returns earned
• Director fees and trust distributions — payments received as a company director or trust beneficiary

Income Types That Are Not Counted

• Lump-sum leave payments on termination of employment
• Child support payments you receive
• Certain compensation payments (e.g., workers' compensation periodic payments are treated separately)
• Family Tax Benefit payments
• Rent Assistance
• Energy Supplement payments

Salary sacrifice arrangements require special attention. Any pre-tax salary sacrifice to superannuation reduces your gross employment income reported to Centrelink, potentially keeping your payment higher. Our Salary Sacrifice Guide explains how concessional contributions interact with both employer SG rate obligations and Centrelink reporting.

How Does the Assets Test Interact with the Income Test?

Services Australia applies both an income test and an assets test to your Centrelink claim, then pays you the lower of the two results. You must pass both tests to receive the full payment rate.

Assets above the full-pension limit reduce the Age Pension by $3.00 per fortnight for every $1,000 of assets above the threshold (single rate) or $1.50 each for couples. The assets test does not count your principal home, but it does count superannuation balances if you have reached Age Pension age.

For working-age payments such as JobSeeker and Youth Allowance, separate lower asset limits apply. A single homeowner on JobSeeker faces an asset limit of approximately $314,000, while a non-homeowner's limit is roughly $566,000. Understanding how both tests interact helps you decide whether to draw down savings, adjust your superannuation balance through Superannuation Calculator modelling, or restructure investments before claiming.

How Much JobSeeker Do You Keep with Part-Time Work?

A single person on JobSeeker with no children who earns $600 a fortnight keeps $549.30 of the $808.70 maximum, for $1,149.30 in total before tax. The reduction does not change on 20 September — only the maximum rate does — so from 20 September 2026 the same fortnight keeps $565.50:

1. Maximum rate from 20 March 2026: $808.70 (from 20 September 2026: $824.90)
2. First $150 — free area, no reduction
3. $150 to $256 at 50c: $53.00
4. $256 to $600 at 60c: $206.40
5. Total reduction $259.40; payment $549.30, or $565.50 from 20 September 2026

Working credits built up in low-income fortnights are used before this test applies, so the first higher fortnight after a quiet stretch often keeps more. Try your own figures in the JobSeeker payment calculator, then put wages and payment together through the take-home pay calculator — JobSeeker is taxable.

How Do You Report Income to Centrelink?

You report your gross employment income to Centrelink every 14 days on your designated reporting day, using one of four channels: the myGov app, the Centrelink online account, the Express Plus app, or by phone on 13 28 50.

Step-by-Step Reporting Process

1. Log in to myGov and navigate to your linked Centrelink account
2. Select “Report Employment Income” from the Payments and Claims menu
3. Enter your gross income for the reporting period — this is your total pay before tax, Medicare levy, or salary sacrifice deductions
4. Declare any other income such as bank interest, rental income, or overseas income received during the fortnight
5. Confirm hours worked — Centrelink requires both the dollar amount and the total hours for mutual obligation tracking
6. Submit your report before 7:00 pm AEST on your reporting day to avoid payment delays

Failing to report on time suspends your payment. If you miss your reporting day, submit as soon as possible — late reports are processed the next business day. Deliberately underreporting income results in a Centrelink debt, and Services Australia applies a 10% recovery fee on debts caused by false reporting.

Employers now report payroll data to the ATO through “Single Touch Payroll” (STP), and Centrelink cross-references this data against your self-reported figures. Discrepancies trigger automated reviews. Our Understanding Your Payslip guide explains which payslip figure to use when reporting to Centrelink.

Current Maximum Rates and Indexation Dates

JobSeeker and pension rates move on 20 March and 20 September; student payments on 1 January. The middle column is what is paid now, to 19 September 2026; the last column is the 20 September 2026 indexation, published in the DSS rates list on 20 August 2026 and verified here on 28 August 2026. Keep the March figures for any payslip or Centrelink letter dated before 20 September.

The taper rates — 50 and 60 cents for allowances, 40 cents for single principal carers, 50 cents (single) and 25 cents each (couple) for pensions — are unchanged by the September indexation, and so are the free areas ($150 for JobSeeker, $226 for a single pensioner), which index on 1 July. It is the maximum rates that move on 20 September, and the cut-offs move with them. The JobSeeker and Age Pension calculators hold both dated sets and switch over on the day.

How Does Working Credit Help You Keep More of Your Payment?

Working credits build in fortnights when your employment income is under $48. When a later fortnight is higher, Services Australia applies those credits to your income first, so you can still get some payment even above the published cut-off. Students on Austudy or Youth Allowance have the equivalent Income Bank, which builds while income is under $539; pensioners have the Work Bonus. Your balance is shown in your Centrelink online account — none of our calculators assume one.

Related Resources

These tools and guides help you model the combined impact of Centrelink income testing, Australian income tax, and employer obligations on your take-home pay and salary planning.

• JobSeeker Payment Calculator — what you keep of JobSeeker when you work part-time
• Austudy & Youth Allowance Calculator — the student income test with current rates
• Age Pension Income Test Calculator — single and couple tests with the Work Bonus
• Take-Home Pay Calculator — estimate your after-tax income including Centrelink payments in your total assessable income
• Tax Brackets Guide — view the FY2025-26 marginal tax rates that apply to your combined employment and Centrelink income
• Income Tax Calculator — calculate PAYG withholding on your employment income, including the Medicare levy and surcharge thresholds
• Superannuation Calculator — check how your employer's SG rate contributions affect your retirement savings alongside Centrelink entitlements
• Parental Leave Pay Guide — understand government-funded parental leave and how it interacts with Centrelink family payments
• Low Income Tax Offset Guide — find out if you qualify for the LITO, which reduces tax for Australians earning under $66,667

Frequently Asked Questions