Older Australians receiving government pensions now have greater income flexibility thanks to a boosted Work Bonus scheme in 2025. The initiative allows eligible pensioners to earn more money from work without reducing their pension payments.
This change is aimed at encouraging part-time employment while supporting pensioners’ financial independence amid rising living costs.
What Is the Work Bonus?
The Work Bonus is an income test concession that helps Age Pensioners and eligible recipients of certain payments to keep more of their pension when they earn money through employment.
It does this by excluding a portion of income from the income test used to calculate pension eligibility and payment amounts.
Key Updates in 2025
The government introduced a $4,000 boost to the Work Bonus to provide even greater flexibility. This means new pensioners can earn more without reducing their payments.
Major Features of the Updated Work Bonus
Here’s a breakdown of the current benefits under the updated Work Bonus scheme:
| Feature | Details |
|---|---|
| Fortnightly Income Exemption | First $300 of income is exempt every 2 weeks |
| Work Bonus Income Bank | Unused exemption amounts accumulate up to $11,800 |
| New Pensioner Bonus (2025) | One-time $4,000 credit added automatically |
| Eligible Income Types | Wages, salaries, and self-employment income |
| Ineligible Income | Passive income like rent, dividends, interest |
Who Can Access the Work Bonus?
To be eligible for the Work Bonus, you must:
- Be receiving the Age Pension, Carer Payment, or Disability Support Pension (if over Age Pension age)
- Be earning income from work or self-employment involving personal effort
- Be of Age Pension age, which is currently 67 years
No separate application is needed—the Work Bonus is automatically applied when you report your income to Centrelink.
How the $4,000 Boost Helps
The $4,000 Work Bonus credit is a one-off addition for new Age Pension recipients. It means you can immediately earn an extra $4,000 from work before your pension is affected. Combined with the existing income bank system, this gives pensioners more earning power.
For example:
- If you haven’t worked recently, your Work Bonus bank could grow up to $11,800
- With the $4,000 credit, a new pensioner could have $15,800 in Work Bonus buffer
- This allows you to return to work casually or part-time without financial penalties
Types of Income That Qualify
The Work Bonus applies only to employment income, such as:
- Wages and salary
- Bonuses and commissions
- Income from personal exertion (if self-employed)
It does not apply to:
- Superannuation withdrawals
- Rental income
- Business income where the pensioner is not actively involved
Making the Most of the Work Bonus
Here are some tips for maximizing the benefits of the Work Bonus:
- Track your income: Make sure your earnings don’t exceed your Work Bonus balance if you want to avoid reductions
- Report accurately: Always report employment income through your myGov account
- Use part-time work strategically: Consider casual roles or seasonal work to take advantage of the income bank
Benefits to the Economy and Individuals
The updated Work Bonus benefits not only individuals but also the broader economy. It allows skilled older Australians to remain active in the workforce, contributing their experience and earning supplemental income without losing government support.
The 2025 update to the Work Bonus scheme provides a powerful financial tool for pensioners. With a $4,000 starting credit, a $300 fortnightly exemption, and a generous income bank, retirees can take on part-time or casual work with less worry about pension reductions.
This initiative supports both financial independence and workforce participation, making it a win-win for older Australians.
FAQs
Do I have to apply for the Work Bonus or the $4,000 credit?
No. The Work Bonus and the $4,000 credit are automatically applied to eligible pensioners.
What happens if I don’t use the $300 exemption?
The unused amount accumulates in your Work Bonus income bank, up to $11,800, for future use.
Does self-employment qualify for the Work Bonus?
Yes, as long as it involves personal effort, such as consulting, freelancing, or contract-based services.