Centrelink Payments Rise on 20 September. Deeming Takes Some of It Back.

On 20 September 2026, more than 5.3 million Australians get a pay rise. Age Pension, Disability Support Pension, Carer Payment, JobSeeker, Youth Allowance and Rent Assistance all move up in the twice-yearly indexation round.

That is the headline, and it is genuinely good news. But something else changes on exactly the same day, and it barely gets a mention: deeming rates go up too. For anyone whose payment is worked out under the income test, that quietly cancels part of the increase before it lands.

Here is what actually changes, and how to work out what you will really be left with.

These are the new maximum fortnightly rates, including the pension and energy supplements where they apply:

You may have noticed the pension rose by about 3% while JobSeeker rose by about 2%. That is not favouritism, it is two different formulas.

Allowances like JobSeeker and Youth Allowance are indexed to the Consumer Price Index (CPI, the standard measure of how much prices have risen). This round picks up the 1.4% rise in the March quarter and the 0.6% rise in the June quarter, which is where the roughly 2% comes from.

Pensions get a better deal. They are indexed by the higher of two inflation measures, and then checked against a wages benchmark, so that the single pension keeps pace with average earnings rather than just prices. When wages grow faster than prices, as they did this time, the pension gets the bigger number.

Deeming is the rule Centrelink uses to work out income from your savings and investments. Rather than asking what your money actually earned, it assumes a set rate of return and counts that as income, whatever your bank is really paying you.

From 20 September 2026 the deeming rates rise by half a percentage point each. The lower rate goes from 1.25% to 1.75%, and the upper rate goes from 3.25% to 3.75%. The thresholds where the higher rate kicks in do not change: the first $66,800 for a single person, or $110,600 for a couple combined, is deemed at the lower rate, and everything above that is deemed at the higher rate.

This is the third rise since the pandemic freeze ended. Deeming sat at 0.25% and 2.25% from May 2020, went to 0.75% and 2.75% in September 2025, then 1.25% and 3.25% in March 2026, and now 1.75% and 3.75%.

More deemed income means more assessed income. More assessed income means a smaller payment for anyone already above the income test free area, which for a single pensioner is $226 a fortnight, or $396 a fortnight for a couple combined. Above that, the payment drops by 50 cents for every extra dollar of assessed income.

Take a single Age Pensioner with $250,000 in financial assets, no other income, and whose payment is worked out under the income test.

Before 20 September, the old deeming rates give $66,800 at 1.25% ($835 a year) plus $183,200 at 3.25% ($5,954 a year). That is $6,789 a year, or about $261 a fortnight. That sits $35 above the $226 free area, so the pension is reduced by about $17.50 a fortnight.

After 20 September, the new rates give $66,800 at 1.75% ($1,169 a year) plus $183,200 at 3.75% ($6,870 a year). That is $8,039 a year, or about $309 a fortnight. Now they are $83 above the free area, so the pension is reduced by about $41.60 a fortnight.

The extra reduction is roughly $24 a fortnight. Against a headline rise of $36.80, they are about $12.75 a fortnight better off, not $36.80. Real, but roughly a third of what the news said.

Not everyone. Centrelink runs both an income test and an assets test, then pays whichever produces the lower amount. Deeming only feeds the income test, so it only changes your payment if the income test is the one binding you.

If you are on the full pension with modest savings, the free area absorbs the change and you keep the whole increase. If you are assessed under the assets test, a deeming change makes no difference to your payment at all. It is the part-pensioners in the middle, with a decent chunk of money in deemed assets and the income test doing the work, who lose part of the rise.

At the far end, if your deemed financial assets are large enough, the clawback can swallow the increase entirely. In practice, most people with balances that big are assessed under the assets test instead, where the deeming rise changes nothing.

None of this needs a form. The new rates and the new deeming rates are applied automatically. But three things are worth your time:

Because Centrelink payments are taxable, they stack on top of any other income you have. Someone drawing a part pension and also doing a couple of shifts a week has both amounts counted together, and the combined figure decides the tax.

For most pensioners this ends in no tax at all, because the seniors and pensioners tax offset does the heavy lifting. But if you are working alongside a payment, or you have investment income on the side, it is worth putting the total through a calculator before you assume the refund will look like last year's.

The same applies to JobSeeker. Tax is not always withheld from it by default, and people who work part of the year and receive a payment for the rest are the classic case of a surprise bill at tax time. You can ask Services Australia to withhold tax from your payment, which is a lot less painful than finding out in October.