On 1 July, the government adjusted a range of Centrelink thresholds that affect the Age Pension. Several limits are increasing, which means some older Australians will receive a little more pension and others may newly qualify for a part payment. The maximum Age Pension rate itself is not changing in July. Changes also apply to funeral bond limits, Special Disability Trust caps and retirement village rules.
Key Takeaways
- On 1 July 2026, the government will update several Centrelink thresholds, which could increase your Age Pension or aged care support.
- Asset free areas rise for all groups, allowing you to hold more wealth before your pension starts to reduce.
- Income free areas increase slightly, meaning singles can earn $8 more and couples $16 more per fortnight.
- Deeming thresholds, the extra allowable amount (EAA) and funeral bond limits will also increase on 1 July.
- The maximum Age Pension payment rate is not changing in July. It is indexed separately in March and September.
Each 1 July, the government indexes a range of Centrelink thresholds to keep pace with the cost of living. Think of it as a quiet system reset. It ensures the rules stay in line with everyday prices rather than falling behind over time.
This July round focuses on income limits, asset limits, exempt amounts and the thresholds used for pensions and aged care means assessments.
Does the Age Pension Rate Increase in July?
Many people assume the pension rate changes on 1 July. It does not.
What does change is how much you can own or earn before your pension starts to reduce. These are the threshold limit, not the payment rate itself. Pension payment increases are handled separately in March and September each year.
New Asset Test Limits From 1 July 2026
The assets test looks at the market value of most things you own, not including your principal home if you are a homeowner.
From 1 July 2026, the asset free area increases across all groups:
Situation | Increase From 1 July | New Threshold |
Single homeowner | +$11,500 | $333,000 |
Couple homeowner | +$17,500 | $499,000 |
Single non-homeowner | +$20,000 | $600,000 |
Couple non-homeowner | +$26,500 | $766,000 |
These increases might not sound dramatic but they can make a significant difference if you are at the edges of a threshold. For some people it may mean becoming newly eligible for a part pension. For others it provides a bit more breathing space before payments start to reduce.
For example, if you are a single homeowner with $340,000 in assessable assets the increased limit puts you just $7,000 above the $333,000 threshold. This can lift your fortnightly pension payment or make you newly eligible for a part-pension.
For a more information read our article on income and means assessments .
New Income Test Limits From 1 July 2026
The income test works alongside the assets test, looking at money you receive from work, investments or other sources each fortnight.
The income-free area is the amount you can earn before the pension starts to reduce. From 1 July 2026 this increases slightly:
- Singles can earn an extra $8 per fortnight before payments reduce.
- Couples can earn an extra $16 per fortnight combined.
Again, this may seem a small amount, but if you are working casual shifts or receiving a small investment income, it provides a bit of extra room before your payments are affected.
Deeming Thresholds Update for Savings and Investments
If you have savings or investments, Centrelink applies a deeming. This is an assumed rate of return on your financial assets rather than your actual earnings.
There are two deeming rates. A lower rate applies to the first portion of your financial assets and a higher rate applies to anything above a set threshold.
From 1 July 2026 those thresholds increase:
- For singles the threshold rises by $2,600 to $66,800.
- For couples the threshold rises by $4,400 to $110,600.
The deeming rates themselves stay at 1.25% and 3.25%.
In practical terms this means a slightly larger portion of your savings may be assessed at the lower rate.
For example, if you are single with $70,000 in savings, the first $66,800 is now assessed at 1.25%. Only the remaining $3,200 is assessed at the higher 3.25% rate.
Extra Allowable Amount for Retirement Villages
If you live in a retirement village or a granny flat arrangement, Centrelink uses something called the “extra allowable amount” (EAA) to determine how you are assessed.
This figure represents the gap between what homeowners and non-homeowners can hold before their full Age Pension starts to reduce. It helps Centrelink decide whether to treat you as a homeowner or a non-homeowner.
From 1 July 2026 the EAA increases to $267,000.
Why does that distinction matter? Non-homeowners may be eligible for Rent Assistance, which can add a meaningful amount to fortnightly income. For some village residents this change may open up support they were not previously eligible for.
There is no change to Rent Assistance rates or thresholds themselves on 1 July. The change is purely to the EAA.
Higher Exemption Limits for Funeral Bonds
Many people choose to set aside money for future funeral expenses through a funeral bond. Centrelink allows eligible bonds to be exempt from the assets and income tests up to a set limit.
From 1 July 2026 the exempt limit increases to $16,250.
You can hold up to two eligible bonds but the combined amount must stay below this limit. You also must not have a prepaid funeral in place for the same person, or the exemption will not apply.
Updated Concessional Limits for Special Disability Trusts
A Special Disability Trust (SDT) allows families to set aside money for the long-term care and accommodation of a family member with a severe disability. Assets held in an eligible SDT receive significant Centrelink concessions.
The concessional asset limit is the amount in an SDT that is exempt from the beneficiary’s assets test. This is indexed each year on 1 July.
From 1 July 2026 this limit increases to $862,750.
SDTs are complex structures and setting one up or reviewing an existing one requires specialist legal and financial advice.
How July Thresholds Impact Aged Care Costs
Your Centrelink assessment often flows directly into your aged care costs.
The same income and assets tests that determine your Age Pension also determine your Support at Home contributions. They also set your residential aged care means-tested fees.
If your assessed position improves under the new thresholds, your aged care contributions may decrease.
See our aged care schedule of fees and charges for more information on aged care costs and contributions.
How Our Free Service Helps
Working out how Centrelink changes affect your aged care budget is genuinely complex. We have a range of resources to help you understand how government funding can affect your aged care fees and costs.
Aged Care Decisions is a free, independent service that helps Australian families find home care or aged care home options matched to their needs, location and budget. We do not give financial or legal advice, but we do take the running around out of finding the right care.
Our Aged Care Specialists can help you:
- Understand which aged care options are available to you right now.
- Compare Support at Home providers in your area.
- Find aged care homes with availability that suits your care needs.
- Get a personalised, no-obligation Options Report at no cost.
Get your FREE Aged Care Provider List today to save time comparing options.
What To Do Next
- Check your updated pension estimate
Log in to your MyGov Account and access Centrelink to see your updated payment details after 1 July. - Contact the Financial Information Service
Speak to the Financial Information Service. This is a free, factual guidance service run by Services Australia to help you understand how the July changes apply to your situation. - Speak with an independent financial adviser
Consult a professional if you are considering downsizing, moving into a retirement village or restructuring your assets. You can use the government’s Moneysmart register to find a licensed advisor. - Check your Support at Home contributions
Contact your provider directly after 1 July to see if your contributions have changed. - Get your free Options Report
If you are looking for an aged care provider, request your free Options Report.
Changes to Aged Care Assets Test FAQs
Does the Age Pension rate increase on 1 July 2026?
No. The maximum full Age Pension rate does not change in July. It is updated in March and September each year in line with movements in wages and the cost of living. Any increase you received earlier in 2026 came in March.
Who benefits most from the July 2026 threshold changes?
Part pensioners are most likely to notice a benefit. If your assets or income were just above the old limits you may now receive a higher payment or become newly eligible for a part pension.
What are the new asset free areas from 1 July 2026?
The asset free area increases by $11,500 for single homeowners, $17,500 for couple homeowners, $20,000 for single non-homeowners and $26,500 for couple non-homeowners. These are the amounts above which the Age Pension starts to reduce.
How do deeming thresholds affect me?
If you have money in bank accounts, shares or managed funds, Centrelink uses deeming to assess income from those assets. The July changes increase the threshold below which the lower deeming rate applies, which can reduce your assessed income slightly.
What is the new funeral bond exempt limit?
The exempt limit for eligible funeral bonds increases to $16,250 from 1 July 2026. You can hold up to two eligible bonds but the combined amount must stay below this figure.
What is the extra allowable amount and why does it matter for retirement villages?
The extra allowable amount (EAA) increases to $267,000 from 1 July 2026. Centrelink uses this figure to decide whether a retirement village or granny flat resident is treated as a homeowner or non-homeowner — a distinction that can affect eligibility for Rent Assistance.
Will my aged care fees change after 1 July?
They may shift slightly depending on your updated Centrelink assessment. If your assessable income or assets reduce under the new thresholds your Support at Home contributions or residential aged care means-tested fees may also reduce. It is worth checking with your provider or Services Australia after 1 July.
What is the big change coming after July 2026?
From 1 October 2026, basic support at home personal care services (including showering, dressing and continence support) will become fully government funded under Support at Home. Participants will pay no contribution for these services from that date.
The information in this article is purely factual in nature and does not take into account your personal objectives, situation or needs. It is not intended to imply any recommendation, opinion or advice. You should seek advice from a qualified professional about your particular needs, financial situation and objectives.
