Why use this calculator
The question people actually need answered is not what the maximum payment is, Services Australia publishes that, but what happens when they take a shift. Income tests reduce payments by a set number of cents in the dollar above a free area, and combined with income tax the effective marginal rate can exceed what a high earner pays, which is genuinely disorienting the first time you see it.
This calculator shows what you keep from each extra hundred dollars earned, where your payment cuts out entirely, and how a partner's income affects yours. Because payment rates change every March and September, the rate is an input rather than a hard-coded figure, so the result stays accurate between indexation rounds.
How to use it
- Look up your payment's current rate and income test on the Services Australia payment rates page.
- Rates are indexed in March and September, so a figure from last year will be wrong.
- Enter the maximum fortnightly rate for your situation, which varies with whether you are single, partnered, or have dependent children.
- The income free area and taper rate are listed alongside it: the free area is how much you can earn before the payment reduces, and the taper is the cents lost per dollar above it.
- Add your gross fortnightly employment income before tax, and your partner's if you have one, along with their own threshold and taper.
What each result means
- Estimated payment per fortnight
- What Centrelink would pay for this fortnight after the income test. Assets tests and other rules may reduce it further.
- Earnings before the payment starts reducing
- How much more you could earn each fortnight before your own income starts to reduce the payment. Below the income free area your payment stays at the maximum rate you entered.
- Earnings before the payment stops
- How much more you could earn each fortnight before the taper reduces your payment to nil, taking any partner income reduction into account. If it shows nil, the note gives the income you would need to fall below.
- Reduction from your income
- How much payment you lose because of your own earnings above the free area.
- Reduction from partner income
- How much you lose because of your partner's earnings. Partner income usually has a higher threshold and a gentler taper.
- Total income this fortnight
- Payment plus employment income before tax. This is the figure that matters for a household budget.
- Payment per year (if unchanged)
- The fortnightly payment multiplied by 26, if your circumstances stayed the same all year.
- You keep per extra $100 earned
- Your effective take from additional work before income tax. This is the number that decides whether an extra shift is worth taking.
- Income cut-out point
- The fortnightly income at which the payment reaches zero. Just below it you may still qualify for concession cards tied to the payment.
The formula
Payment equals the maximum rate, less your income above the free area multiplied by the taper rate, less your partner's income above their threshold multiplied by the partner taper. The cut-out point, where the payment reaches zero, is the free area plus the maximum rate divided by the taper rate. What you keep from an extra dollar is one minus the taper, before income tax is also applied.
How this number is used in practice
Effective marginal rates on income support are often higher than on high salaries. Losing fifty cents of payment per dollar earned, then paying tax on the earnings, can leave you keeping under forty cents. That is not a reason to avoid work, but it does mean the financial gain from a few extra hours is smaller than the gross pay suggests, and it explains why part-time work patterns cluster around the free area.
The income bank changes the arithmetic for students and pensioners. Youth Allowance and Austudy accrue unused income free area that can be used in a later fortnight, and the Work Bonus does something similar for Age Pension recipients. Someone working irregular hours may pay no penalty at all on a busy fortnight if they have accrued enough credit, which this simple model does not capture.
Concession cards frequently matter more than the last dollar of payment. A payment reduced to a few dollars a fortnight still carries the healthcare card, which is worth substantially more than the cash for anyone with regular prescriptions. Losing eligibility entirely is a much bigger step than losing most of the payment.
Worked examples
$800 maximum rate, $150 free area, 50c taper, earning $400 a fortnight
Income reduces the payment by $125, leaving $675 a fortnight plus the $400 earned. $1,075 in total.
The same payment with no employment income
The full $800 fortnightly rate is payable, with a cut-out point of $1,750 a fortnight.
Partnered, with a partner earning $2,000 a fortnight
$600 of partner income above the $1,400 threshold cuts $360 from the payment, on top of $25 from your own $200. Leaving about $415 a fortnight.
When people use it
- Working out whether taking extra shifts leaves you better off
- Estimating household income when moving from full payment to part-time work
- Checking where your payment cuts out entirely
- Understanding how a partner starting work affects your payment
- Planning around irregular income across fortnights
Tips
- Payment rates and thresholds are indexed in March and September. Take the figures from Services Australia rather than a calculator's defaults.
- Report income in the fortnight you earn it, not when it is paid. Getting this wrong is the most common cause of a debt notice.
- Students and Age Pension recipients may have an income bank or Work Bonus that offsets a high-earning fortnight. This simple model does not include it.
- Assets tests apply separately to most payments and can reduce or cancel a payment regardless of income.
- A payment reduced almost to zero often still carries a concession card, which can be worth more than the remaining cash.
- Centrelink payments are generally taxable income and must go on your tax return, even though little or no tax is withheld.
What it assumes, and where it stops being accurate
- Only the income test is modelled. Assets tests, deeming on financial investments, and residency rules are not.
- Income banks, the Work Bonus and other credit arrangements are not included, so real payments may be higher in a high-earning fortnight.
- Rent assistance, family tax benefit, pharmaceutical allowance and energy supplements are not added.
- Rates, free areas and tapers are whatever you enter. The calculator does not know which payment you are on.
- Partner income is tested with a single threshold and taper; some payments use more complex combined tests.
Terms used on this page
- Income free area
- How much you can earn each fortnight before your payment starts to reduce.
- Taper rate
- The cents of payment lost for each dollar earned above the free area.
- Cut-out point
- The income at which a payment reduces to zero.
- Income bank
- Accrued unused income free area that students and some pensioners can draw on in a high-earning fortnight.
- Deeming
- The assumed rate of return applied to financial assets under the income test, regardless of actual earnings.
Questions people ask
- How much can I earn before my Centrelink payment reduces?
- Each payment has its own income free area, published by Services Australia alongside the payment rate. Below it your payment is unaffected; above it the payment reduces by the taper rate, commonly 50 or 60 cents in the dollar. Because both the free area and the rate are indexed twice a year, always take the current figures rather than relying on remembered numbers.
- Do I lose the whole payment if I get a job?
- Not immediately. The payment tapers down as income rises and only reaches zero at the cut-out point, which this calculator shows. Many people continue receiving a part payment while working part time, and the concession card that comes with it often continues too. Reporting income accurately each fortnight is what keeps the adjustment smooth.
- Is Centrelink payment taxable?
- Most working-age payments and the Age Pension are taxable income and must be declared on your tax return. Little or no tax is withheld by default, so people with other income sometimes face a bill at lodgement. You can ask Services Australia to withhold tax from your payment to avoid that. Some payments, such as family tax benefit, are not taxable.
- How does my partner's income affect my payment?
- Most payments test combined income, with a separate and usually higher threshold for partner income and a gentler taper. That means a partner returning to work can reduce your payment even if your own income has not changed. Couple rates are also lower per person than single rates, on the basis that shared households cost less per head.
- What is the difference between the income test and the assets test?
- The income test reduces your payment based on what you earn; the assets test reduces it based on what you own, excluding your home for most payments. Both are applied and whichever produces the lower payment is the one used. This calculator models only the income test, so someone with substantial assets may receive less than it shows.
Use this with
Centrelink Income Test Calculator answers one part of the question. These pick up where it stops: Salary After Tax Calculator, Budget Planner Calculator, Rent Affordability Calculator and Australian Income Tax Calculator.
Where these figures come from
Figures and rules on this page follow Australian law and ATO guidance.
- Services Australia: payment rates. Current fortnightly rates, free areas and taper rates for every payment
- Services Australia: income test for JobSeeker Payment. How employment and partner income reduce payments
Centrelink Income Test Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.