The Aged Care Means Test Explained: Income, Assets, the Family Home and the 2026 Thresholds
Services Australia's means assessment decides whether you get help with accommodation and how much you contribute to hotelling and non-clinical care. This guide sets out exactly what counts, the current thresholds and percentages, how the family home is treated, and the formula, with a worked example.
What the means test decides
Every person entering permanent residential aged care can have their income and assets assessed by Services Australia (or the Department of Veterans' Affairs). The assessment produces a single daily figure, the means tested amount, which decides three things for people on the 1 November 2025 fee arrangements:
- whether you are a low-means resident who gets government help with accommodation, or pay the agreed room price;
- your hotelling contribution (up to $22.15 a day); and
- your non-clinical care contribution (up to $107.32 a day).
The basic daily fee ($66.80) is not means tested; everyone pays it. Nor is clinical care, which the government funds in full. Our fees explainer covers each fee; this page is about the assessment that sets them. If you would rather see the answer than the working, the aged care fees calculator applies the formula below to your figures.
What income counts
- Age pension, service pension and other income support payments
- Deemed income on financial assets - bank accounts, term deposits, shares, managed funds and account-based pensions. Services Australia assumes these earn 1.25% on the first $66,800 (single) or $110,600 (couple) and 3.25% above that, regardless of what they actually earn
- Net rental income from investment property, and net income from a business or farm
- Superannuation and overseas pensions, annuities and allocated pensions
- Family trust distributions and private company dividends
- Deemed income on gifts above the allowed amounts
Wages are rarely relevant at this stage, but they count if earned. For a couple, half of the combined income is attributed to the person entering care.
What assets count
- Financial assets: bank accounts, term deposits, shares, bonds, managed funds, gold
- Superannuation balances and account-based pensions
- Investment property, holiday homes, farms and business interests
- Household contents and personal effects, usually valued at $10,000
- Cars, boats and caravans at market value
- Private trusts and companies
- Any refundable accommodation deposit you have paid or will pay - even if a family member pays it
- Gifts above $10,000 in a financial year or $30,000 over five years, for five years after the gift
National Redress Scheme payments are exempt. For a couple, half of the combined assets belong to each partner.
How the family home is treated
This is the part that decides most outcomes. If you keep your home:
- It counts as an asset only up to the home exemption cap of $214,884, or its net market value if lower. A $1,500,000 house and a $300,000 unit both count as $214,884.
- For a couple, each partner is treated as owning half, and the cap applies to each half.
- It does not count at all while a protected person lives there: your partner or a dependent child; a carer on an income support payment who has lived there for at least two years; or a close relative on income support who has lived there for at least five years.
If you sell the home, the proceeds become a financial asset, counted in full and deemed as income. This is why the sequence of selling, paying a RAD and being assessed matters, and why advice before selling is worth having.
The formula, 1 July 2026
Services Australia calculates an income tested amount and an asset tested amount, adds them, and divides by 364 to get a daily figure.
Income tested amount (single person)
| Income band | Rate |
|---|---|
| Up to $35,521 (income free area) | 0% |
| $35,521 to $88,156 | 50% |
| $88,156 to $101,105 | 0% |
| $101,105 to $117,230 | 50% |
| $117,230 to $142,085 | 0% |
| Above $142,085 | 50% |
Couple (illness separated) thresholds are slightly different: free area $34,793, first threshold $87,428, fourth $139,173.
Asset tested amount
| Asset band | Rate |
|---|---|
| Up to $64,500 (asset free area) | 0% |
| $64,500 to $214,884 | 17.5% |
| $214,884 to $258,000 | 0% |
| $258,000 to $361,367 | 7.8% |
| $361,367 to $547,884 | 0% |
| Above $547,884 | 7.8% |
The alternating 0% bands are not a mistake. They are how the new system makes each contribution "switch on" cleanly: the first income and asset bands take you exactly to the maximum accommodation supplement ($72.30 a day), the next non-zero bands fill the hotelling contribution and then the non-clinical care contribution, and the flat bands in between stop the contributions overlapping.
How the daily amount is applied
- Accommodation. If your means tested amount is below $72.30, you are low means: the government pays towards your accommodation and you pay a contribution based on your amount. If it is $72.30 or more, you pay the agreed room price.
- Hotelling contribution = the lower of (means tested amount minus $72.30) and $22.15.
- Non-clinical care contribution = the lower of (means tested amount minus $72.30 minus $22.15) and $107.32.
Worked example
Single, owns a home worth $900,000 with no protected person, $300,000 in other assets, $50,000 annual income.
- Assessable assets = $300,000 + $214,884 (capped home) = $514,884
- Income tested amount = 50% × ($50,000 − $35,521) ÷ 364 = $19.89 a day
- Asset tested amount = [17.5% × ($214,884 − $64,500) + 7.8% × ($361,367 − $258,000)] ÷ 364 = $94.45 a day (assets of $514,884 sit in the 0% band between $361,367 and $547,884)
- Means tested amount = $114.34 a day, above $72.30, so they pay the room price
- Hotelling contribution = $22.15 (the maximum)
- Non-clinical care contribution = $19.89 a day
Total means-tested contributions of about $42.04 a day on top of the basic daily fee and the room. The calculator does this for any combination, and RAD vs DAP covers how the accommodation choice feeds back into the assessment.
Getting assessed
- Pensioner, no home: Services Australia usually has what it needs. Check your details are current and ask for a fee advice letter (1800 227 475).
- Pensioner, homeowner: form SA485 (property details).
- Everyone else: form SA457, the Aged Care Calculation of your Cost of Care, online or on paper.
The fee advice letter is valid for 120 days before entry. You must report changes in circumstances within 28 days of them happening; fee decreases are backdated, increases are not if you report on time. If you choose not to disclose your means, you are treated as able to pay the maximum of every fee, which is rarely a good idea unless your means are far above the thresholds.
For help comparing homes once you know your fees, the AusCareGuide aged care directory lists every approved home by suburb, and our free placement help service will shortlist for you.
Figures are from the Schedule of Fees and Charges for Residential Care from 1 July 2026 and the Department of Health, Disability and Ageing fee scenarios, current as at August 2026. Fees, thresholds and caps are indexed on 20 March and 20 September and the MPIR changes quarterly, so check the current schedule before making decisions. This guide is general information, not financial advice.
Frequently asked questions
- What income counts in the aged care means test?
- Age pension and other income support payments, deemed income on financial assets (not actual interest), net rental income, superannuation income streams, foreign pensions, business income and trust distributions. Deemed income applies to bank accounts, shares, managed funds and account-based pensions. Your home and its contents, cars and a RAD are not deemed.
- Does the family home count in the aged care means test?
- Partly. If you keep the home, it counts as an asset only up to the home exemption cap of $214,884 (or its net value if lower). For a couple, each partner is treated as owning half and the cap applies to each half. The home is not counted at all while a protected person lives there: your partner, a dependent child, or an eligible carer or close relative who has lived there for two or five years respectively.
- What are the aged care asset thresholds for 2026?
- From 1 July 2026: asset free area $64,500, first threshold $214,884, second $258,000, third $361,367, fourth $547,884. Assets count at 17.5% between the free area and the first threshold, 0% in the next band, 7.8% between the second and third thresholds, 0% in the next band, and 7.8% above the fourth threshold.
- Do I need to do a means assessment?
- If you want government help with your fees, yes. Pensioners who do not own a home usually do not need a form because Services Australia already has their details. Everyone else completes the Aged Care Calculation of your Cost of Care form (SA457), or SA485 if on a pension and a homeowner. If you do not disclose your means you are treated as able to pay the maximum of everything.
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