Pat is 69, gets a part Age Pension, and has been offered a few shifts a fortnight at the local garden centre. The pay would be about $500 a fortnight. Her first question was whether Centrelink would just claw it all back.
It won’t. Thanks to the Work Bonus, the first $300 of Pat’s work income each fortnight is ignored completely, and any unused amount builds up in an “income bank” she can draw on later. Pat would keep most of what she earns. Here’s how it works, with real numbers.
What the Work Bonus is
The Work Bonus isn’t an extra payment. It reduces how much of your work income counts under the Age Pension income test. You don’t need to apply. Centrelink applies it automatically, as long as you report your earnings.
You can get it if you’re Age Pension age (currently 67) and you receive the Age Pension, Carer Payment or Disability Support Pension. People on the transitional rate of pension are not eligible.
It has two parts:
- $300 a fortnight. Up to $300 of eligible work income each fortnight is taken out before the income test applies.
- The income bank (Work Bonus balance). In any fortnight where you earn less than $300, including fortnights where you earn nothing, the unused part is added to your balance. The balance can build to a maximum of $11,800 and is used to offset work income above $300 in later fortnights.
The $11,800 cap was confirmed on Services Australia’s How the Work Bonus works page in October 2026. It was raised from $7,800 to $11,800 on 1 December 2022.
The $4,000 head start
Under rules that apply to claims made from 1 July 2024, when you claim an eligible pension for the first time you start with a Work Bonus balance of $4,000 rather than zero. If you’re re-claiming, your old balance carries over, and if it’s below $4,000 it may be topped up to $4,000 (no more than once every two years).
That head start is useful if you’re thinking about taking a short contract or casual job soon after you start on the pension.
If you’re not working at all right now, your balance still grows by $300 every fortnight until it reaches the cap. Starting from $4,000, it takes 26 fortnights, or about a year, to reach $11,800. In other words, a pensioner who hasn’t worked for a year or so is sitting on a buffer that can cover a decent stretch of casual or contract work with no effect on their pension. Many people don’t realise they have it. Our view is that it’s one of the most underused parts of the pension system.
What income counts, and what doesn’t
According to Services Australia’s list of types of income the Work Bonus applies to, it covers:
- wages and salary from work in or outside Australia
- paid leave while you’re still employed
- director’s fees
- self-employment income where you’re actively working, such as bookkeeping, lawn mowing or plumbing.
It doesn’t apply to:
- leave paid out after your job has ended
- investment income, including interest, dividends and rent
- superannuation
- passive self-employment income, such as managing your own share portfolio or rental properties.
Each person has their own Work Bonus. You can’t use yours to offset your partner’s wages, though reducing your own assessable income lowers your combined income as a couple, which helps you both.
How the income test works on top of it
Once the Work Bonus has been applied, whatever work income is left is added to your other assessable income, such as deemed income from savings. Then the normal Age Pension income test applies. As published by Services Australia in October 2026:
| Your situation | Income free area (per fortnight) | Above the free area |
|---|---|---|
| Single | $226 | Pension reduces by 50c for each $1 over |
| Couple (combined) | $396 | Each partner’s pension reduces by 25c for each $1 over |
So a single pensioner with no other income can earn $526 a fortnight from work ($300 Work Bonus plus the $226 free area) before their pension drops at all. Most people do have some deemed income from savings, which uses up part of that free area. Our article on deeming rates shows how to work that out.
Worked examples
These use the free areas and rates above. They’re simplified and leave out things like Rent Assistance.
Pat: regular part-time work
Pat is single, earns $500 a fortnight and has $80 a fortnight of deemed income from savings. Her balance is empty.
- Work income after the $300 Work Bonus: $200
- Plus deemed income: $280 total assessable income
- Over the $226 free area by $54, so her pension drops by $27 a fortnight
Without the Work Bonus, her assessable income would be $580, and her pension would drop by $177. The Work Bonus saves her $150 a fortnight.
Joan: a seasonal job
Joan, 70, has not worked for over a year, so her balance has built up to the $11,800 maximum. She takes a six-week Christmas job paying $2,000 a fortnight for three fortnights.
- Each fortnight, the first $300 is offset by the fortnightly Work Bonus.
- The remaining $1,700 is offset from her balance.
- Her work income counts as zero for all three fortnights. Her pension is unaffected by the job.
- Her balance falls by $5,100 to $6,700, and starts rebuilding by $300 a fortnight once the job ends.
This is where the income bank really earns its keep. For occasional or seasonal work, it can shelter a surprising amount.
Bob and Mary: a couple, one working
Bob earns $1,000 a fortnight. Mary doesn’t work. Their combined deemed income is $150 a fortnight and Bob’s balance is empty.
- Bob’s work income after the $300 Work Bonus: $700
- Plus $150 deemed income: $850 combined
- Over the $396 couple free area by $454, so each of their pensions drops by 25c in the dollar, or $113.50 each
Mary’s unused Work Bonus can’t be applied to Bob’s wages.
Is working worth it?
For most part-pensioners, yes. Even above the Work Bonus, you lose 50 cents of pension per extra dollar as a single, or 25 cents each as a couple, so you’re always better off in total. There’s also a lot more to it than money. Staying in work, even a few hours a week, keeps you connected, which is a big part of why we like stories such as seniors volunteering with kids.
A few things to watch:
- Report your earnings on time, every fortnight. The Work Bonus is applied to what you report.
- Very high earnings can still take you past the income cut-off point for that fortnight, even with the Work Bonus.
- Your income tax is separate. The Work Bonus doesn’t change how your wages are taxed.
- Be wary of anyone offering “cash jobs” that skip reporting. That puts your pension at risk, and some offers are outright scams aimed at older Australians.
You can check your current Work Bonus balance in your Centrelink online account through myGov.
FAQ
How much can I earn on the Age Pension before it drops?
With no other income, a single pensioner can earn $526 a fortnight from work ($300 Work Bonus plus the $226 income free area, as at October 2026) before the pension reduces. Any deemed income from savings reduces that amount.
What is the maximum Work Bonus income bank?
$11,800, as confirmed by Services Australia in October 2026. Your balance grows by up to $300 a fortnight when you earn less than $300 from work.
Does the Work Bonus apply to rental or investment income?
No. It only applies to employment income and self-employment income where you’re actively working. Interest, dividends, rent and super don’t qualify.
Do I need to apply for the Work Bonus?
No. Centrelink applies it automatically if you’re eligible. You just need to report your employment income.
Can my partner use my Work Bonus balance?
No. Each eligible pensioner has their own Work Bonus and balance, and it can’t be transferred.
This article is general information only and isn’t financial advice. Rates, thresholds and rules change regularly, so check your own situation with Services Australia (or a Financial Information Service officer) before making decisions.
