Age Pension – increase in deeming thresholds for 2025/26 financial year. Increase in “income free area”. However, deeming rates remain unchanged.

Each 1 July, the deeming rate thresholds and the “tax free area” are indexed with reference to the Consumer Price Index.

From 1 July 2025 the new deeming thresholds are $64,200 (single age pensioners) and $106,200 (partnered age pensioners). The thresholds which applied for 2024/25 financial year are respectively, $62,600 and $103,800.

The threshold is the point at which the deeming rate changes from 0.25% to 2.25%.

While this change may appear to be relatively minor, the increase in the threshold may result in the assessed age pension increasing for instalment periods commencing on or after 1 July 2025. Also, for a self funded retiree the increase in the thresholds may result in an entitlement to a part age pension and to a Pensioner Card rather than the Seniors Health Card.

The deeming rates (currently 0.25% up to the deeming threshold and 2.25% over the deeming threshold) remain unchanged. These rates are adjusted on an ad hoc basis from time to time by Ministerial Direction rather than being changed by reference to an index. So, the possibility of the rates reducing in the future may be slim. as, these rates have remained unchanged since 1 May 2020 (when they were reduced as a COVID-19 Measure) and are by historical standards at generous rates.

From 1 July 2025, the income free area for a single age pensioner is now $218 per fortnightly instalment period (previously $212) with the income free area for partnered age pensioners now being $380 per fortnightly instalment period (previously $372).

If income for a fortnight does not exceed the income free area – there is no reduction in the age pension.

If income for a fortnight exceeds the income free area – the age pension is reduced by 50 cents for each dollar in excess of the income free area.