From 20 September 2025, the Government will increase deeming rates for the first time since they were frozen during the COVID-19 pandemic. Deeming rates are used to estimate income from financial assets (like bank accounts and superannuation) when assessing eligibility for payments such as the Age Pension.
Current and new rates
| Deeming rates | Income thresholds | ||
| Current | New | Singles | Couples |
| 0.25% | 0.75% | First $64,200 | First $106,200 |
| 2.25% | 2.75% | Above $64,200 | Above $106,200 |
The Government plan to gradually increase deeming rates back to pre-COVID levels, given this we expect to see further increases in the near future.
Who will this impact?
An increase in deeming rates could reduce benefits and entitlements for those who:
- Receive income-tested pensions.
- Commonwealth Seniors Health Card (CSHC) holders who have an account-based income stream that is deemed.
- Low Income Health Care Card holders.
Example of impact to age pension
Jan, aged 70, is a single homeowner with $250,000 in an account-based pension (ABP) and $50,000 in a bank account on 20 September 2025. Her assessable income and assets are currently under both the income and assets test thresholds full a full pension.
Before the deeming rate increase, she would have been eligible for the full single rate of Age Pension of $1,178.70 per fortnight.
Due to deeming rates increasing by 0.50%, under the income test, Jan’s assessable income will increase from $5,466 to $6,966 per year, and consequently result in a reduction to her age pension to $1,153.74 per fortnight.
Example of impact to CSHC holders
Single CSHC card holders will be able to have approximately $3.7 million in an ABP before their income would exceed the threshold of $101,105 (assuming no other income).
Couples who hard a CSHC will be able to have approximately $5.9 million in an ABP before their income would exceed the threshold of $161,768 (assuming no other income).
Given the high amounts, it is very unlikely the changes will impact many CSHC holders.
What do you need to do?
There is no action required, Services Australia will automatically apply the new deeming rates to your financial assets.
What can you do?
If you’re unsure how this might affect your entitlements, or would like to take advantage of the changes, have a discussion with your financial adviser to ensure you’re making the most from your situation.
Information in this article is of a general nature only and has not been tailored to your personal circumstances. Information in this article reflects our understanding of relevant regulatory requirements and laws etc as at the date of issue, which may be subject to change. Please seek personal advice prior to acting on this information.
