In this guide
- Age Pension eligibility
- How deeming affects means testing for residential aged care
- How deemed income is calculated
- What are the current deeming rates?
- Deeming calculator for 2025-26 rates and thresholds
- Example deeming calculations
- Deeming rates and thresholds for previous years
- Why does the Australian government use deeming?
- Why does the deeming rate increase if you have more investment assets?
- January 2015 changes
In recent years, deeming rates shifted from being an arcane concept few people knew or cared about, to a hot button issue for retirees struggling to make ends meet at a time of rising interest rates and cost-of-living pressures.
The reason is this.
Under the deeming rules, you are ‘deemed’ to earn a certain annual rate of return on your financial assets, regardless of the rate of return you actually earn. Your returns could be higher or lower than the deeming rates. In the case of bank deposits, the returns you are earning may be lower than the current deeming rates while returns from superannuation have been higher. Why does this matter? Because it could affect the amount of Age Pension you receive and the amount you pay for residential aged care.
Age Pension eligibility
Deeming is used to determine your eligibility for the Age Pension under the income test. The other requirements are passing the assets test, reaching Age Pension age and qualifying as an Australian resident.
Deeming rules are used by Services Australia (via Centrelink) for income test calculation purposes. Centrelink also applies the same deeming rates and thresholds when assessing eligibility for the Commonwealth Seniors Health Card (CSHC).
Common types of financial assets that deeming rates apply to include:
- Account-based super pensions
- Savings accounts and term deposits
- Shares
- Managed investment such as managed funds and insurance bonds
- Debentures
Deeming doesn’t apply to the family home and other property assets.
How deeming affects means testing for residential aged care
Deeming rates don’t just affect income-tested Age Pensioners. For anyone entering residential aged care, deeming is used to calculate any means-tested contribution they may be required to pay.
Visit the government’s myagedcare for an explanation of how deeming applies to aged care means testing.
How deemed income is calculated
The deemed income from your investments is calculated by multiplying their current value by the relevant deeming rates. Different deeming rates apply depending on:
- Your living arrangements (whether you live alone or with a partner)
- The value of your investment assets
- Whether or not you (or your partner) currently get the Age Pension.
Once your deemed income is calculated, the amount is then added to any other income you’ve earned from all other sources as part of the Age Pension income test. If your income exceeds the income test thresholds, your Age Pension entitlement will progressively reduce until it cuts off completely.
What are the current deeming rates?
The deeming rates and thresholds that apply 1 July 2025 to 30 June 2026 are listed in the table below.
| Situation | Deeming lower rate | Deeming higher rate |
|---|---|---|
| Single | 0.25% on the first $64,200 of your investment assets, plus | 2.25% on your investment assets over the amount of $64,200 |
| Couple | 0.25% on the first $106,200 of your combined investment assets, plus | 2.25% on your investment assets over the amount of $106,200 |
Deeming calculator for 2025-26 rates and thresholds
Enter your details into our deeming calculator to estimate your annual and fortnightly deemed income.
Deeming rates are set by the Minister for Social Services. The Department of Social Services monitors the rate to ensure that it’s appropriate for market conditions. Any future changes to the deeming rate will coincide with changes to Age Pension rates, which are regularly adjusted based on the consumer price index (CPI), or at any other time if the financial markets fluctuate significantly. The CPI is calculated by the Australian Bureau of Statistics. Any changes to the deeming thresholds are generally made in July each year in line with changes in the CPI.
Example deeming calculations
To illustrate how deeming works, below are single and couple deeming tables that show the deeming amount that will apply at a range of different investment asset values at current deeming rates.
Click each deeming table example name to view.
Below we have also included some example calculations using 2025-25 rates to help illustrate how deeming is calculated:
Deeming rates and thresholds for previous years
The 0.25% and 2.25% deeming percentage rates have been frozen frozen since 1 May 2020 (although the thresholds now change each financial year).
While deeming rates are meant to rise and fall in line with market interest rates, in practice there has often been a lag.
Under pressure from retirees who faced the double whammy of historically low returns from their bank deposits at the time, and a reduction in their Age Pension entitlements due to deeming rates that were higher than they were actually earning, the federal government cut deeming rates in mid-2019 and again in 2020.
- The percentage rates applying from 1 July 2019 to 30 April 2020 were 1% (lower rate) and 3% (upper rate).
- Prior to 1 July 2019 the percentage rates were 1.75% (lower rate) and 3.25% (upper rate).
These rates compare with a cash rate of 1% in 2019 and 0.25% a year later.
Fast forward to June 2025 and the cash rate is 3.85% at the time of writing, while the top deeming rate is frozen at 2.25%. In other words, today’s retirees are winning the deeming rate game.
The deeming rates and thresholds that applied for previous years are listed in the table below.
| Financial year | Deeming lower rate | Deeming higher rate | Single lower threshold | Couple lower threshold |
|---|---|---|---|---|
| 2025-26 | 0.25% | 2.25% | $64,200 | $106,200 |
| 2024-25 | 0.25% | 2.25% | $62,600 | $103,800 |
| 2023-24 | 0.25% | 2.25% | $60,400 | $100,200 |
| 2022-23 | 0.25% | 2.25% | $56,400 | $93,600 |
| 2021-22 | 0.25% | 2.25% | $53,600 | $89,000 |
| 2020-21 | 0.25% | 2.25% | $53,000 | $88,000 |
Why does the Australian government use deeming?
According to the Department of Social Services, some of the benefits of deeming are:
It’s this last point that has many retirees hot under the collar. While returns from assets such as shares and property have indeed been higher than deeming rates in recent years, there is no guarantee this will continue. By their very nature, higher investment returns also come with a higher risk of price fluctuations and years of negative returns. That’s why many risk-averse retirees prefer the safety of capital guaranteed bank deposits to cover their income needs in the short to medium term.
Why does the deeming rate increase if you have more investment assets?
The lower deeming rate is applied to the value of your investment assets up to a threshold amount to reflect the fact that you’ll need a range of low-risk, accessible investments (like savings accounts) to meet your day-to-day living expenses. These types of investments provide lower levels of return.
The higher deeming rate is applied to investment asset values above the threshold amounts to reflect the fact that you can diversify your investment portfolio by chasing higher returns on higher-risk assets (like shares).
January 2015 changes
A major deeming rule change was introduced on 1 January 2015 when the investment balance of all new account-based super pensions were first included in the Age Pension income test. As a result, the deeming rate now applies to these super pensions that retirees can receive tax free, provided they are over 60 years of age and meet a superannuation condition of release.
However, the old rules were ‘grandfathered’ for people who were already receiving account-based super pensions and the Age Pension prior to 1 January 2015, which means their super balances will be forever excluded from the Age Pension income test.
Below is an example of how the rule worked before 1 January 2015:
Source: DSS
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