The PPL income test isn't one threshold — it's two, and the rules around which one applies (and which financial year's income gets tested) make this one of the most operationally confusing parts of PPL eligibility. This guide walks through both tests, how they interact, and how to plan around them.
The two thresholds
These limits apply to your 2025-26 income (1 July 2025 – 30 June 2026). That's the year tested when your baby is born and you claim on or after 1 July 2026 (the reference year is explained below):
| Test | Cap | Who passes |
|---|---|---|
| Individual income test | $186,487 | The claimant's own 2025-26 ATI ≤ this figure |
| Family income test | $386,525 | Combined (claimant + partner) 2025-26 ATI ≤ this figure |
You pass PPL if EITHER test is satisfied. This is important — it's an OR, not an AND.
Singles get the family test too. There is no partner income to add, so "family income" is just your own — which means the family cap works as a second, far higher ceiling. A single claimant on $200,000 is over the individual cap of $186,487 but under the family cap of $386,525, and is eligible.
Partnered claimants get both tests — if your individual income is over $186,487 BUT the family combined is at or below $386,525, you still qualify under the family test. The threshold is designed so a high-earner with a low-earning or non-working partner doesn't lose PPL.
Worked examples
Each example assumes the baby is born and the claim is made from 1 July 2026, so the ATI shown is for 2025-26.
Example 1: single earner
- Single claimant, $165,000 ATI
- Individual test: $165,000 ≤ $186,487 → PASS
- Family test: same $165,000 (no partner to add) ≤ $386,525 → PASS
- Eligible
Example 2: partnered, claimant higher
- Claimant ATI $195,000, partner ATI $80,000
- Individual test: $195,000 > $186,487 → fail
- Family test: $195,000 + $80,000 = $275,000 ≤ $386,525 → PASS
- Eligible (via family test)
Example 3: partnered, both high
- Claimant ATI $195,000, partner ATI $220,000
- Individual test: $195,000 > $186,487 → fail
- Family test: $195,000 + $220,000 = $415,000 > $386,525 → fail
- Not eligible
Example 4: partnered, claimant lower
- Claimant ATI $90,000, partner ATI $290,000
- Individual test: $90,000 ≤ $186,487 → PASS
- Family test not relevant (individual already passes)
- Eligible (via individual test — partner income doesn't matter when claimant is under the individual cap)
Example 4 is the most useful planning insight: if the lower-earning parent claims, partner income mostly doesn't matter. Default-primary-claimant practice is the birth mother for biological births — and if she's the lower earner, her individual test usually passes regardless of partner income.
The reference year — when does income get tested?
The reference year is the financial year that ENDED before the EARLIER of your claim date or the child's date of birth/placement.
This sounds technical but matters in practice:
- Baby born August 2026, claim lodged at birth → earlier date is August 2026 → reference year is 2025-26 (1 July 2025 – 30 June 2026)
- Baby due August 2026, claim lodged May 2026 (pre-birth) → earlier date is May 2026 → reference year is 2024-25 (1 July 2024 – 30 June 2025)
The difference between these two reference years can be 12+ months of income changes. If a promotion in 2025-26 pushed your 2025-26 income over $186,487, claiming pre-birth might pass the test where a same-day-as-birth claim would fail. But the pre-birth claim tests your 2024-25 income against the limit for that year, $180,007, because the earlier date (your claim) falls in 2025-26.
This is rarely a deliberate optimisation but worth knowing if you're near the cap.
What counts as "adjusted taxable income"
ATI is Centrelink's measure of real earning capacity. It's:
- Taxable income (the figure on your notice of assessment) — gross income minus deductions
- + Reportable fringe benefits amount (e.g. salary packaging, car novation)
- + Reportable super contributions (salary sacrifice + personal deductible contributions)
- + Net investment losses (rental loss, share loss added back — the formula treats them as deemed income)
- + Tax-free government pensions / benefits (DVA payments etc.)
- + Net foreign income (overseas earnings not in Australian taxable)
- − Child support paid (deducted)
NOT included: GST refunds, fully-franked dividend franking credits (the gross-up is already in taxable income), inheritance.
Salary packaging through your employer often adds significantly to ATI — many high-earners forget this and assume their "salary" is their ATI. A $170,000 salary with $20,000 of car novation produces ATI ~$190,000, failing the individual cap when the salary alone would pass it.
See the Adjusted Taxable Income guide for a full breakdown.
Reducing ATI before claim
Substantive levers (most take months of planning):
- Defer income into another year — a bonus your employer will pay in July rather than June, or work invoiced after 30 June. This is the one that actually works, because the income genuinely belongs to a different year.
- Maximise deductible expenses — work-related deductions, home-office costs, depreciation on assets. Reduces taxable income before ATI calculation.
- Negative gearing — net investment losses (rental, shares) reduce taxable income but get added back as "net investment losses" in ATI. Generally a wash.
- Not super. Salary sacrifice and personal deductible contributions lower taxable income and are then added straight back as reportable super contributions. ATI does not move. The add-back exists precisely so contributions cannot shift an income test, and the money is locked away until preservation age. Coordinate the levers that do work with the Pre-Birth Money Map's income-optimisation card.
The cleanest lever for many parents is just lodging the claim early to use a lower-income earlier financial year. See When can I claim PPL?.
Verification status of the figures
The limits we quote ($186,487 / $386,525) are the limits for 2025-26 income, indexed 1 July 2026 per Services Australia's "Meeting the income test for Parental Leave Pay" page. They're used when your baby is born and you claim from 1 July 2026. Where the earlier of birth and claim fell in 2025-26, 2024-25 income was tested against the limits for that year ($180,007 / $373,094).
The limits index each 1 July and are published by Services Australia around that date. NestWise checks each new pair against the official page before using it; the limits quoted here are the current values in lib/rates.ts PPL_BY_FY[2027].incomeTest, verified against Services Australia 2026-09-11. The PPL planner tests the year's income that applies to your due date.
How NestWise helps
- PPL planner — full income test with both individual AND family checks, against your saved ATI for the correct reference year
- Free PPL playground — rough income test for an unauthenticated quick-check
- PPL Year Income Estimator (paid) — models your PPL-year income mix and shows how the test outcome shifts if you delay or accelerate the claim
Related guides
- How much PPL will I get from 1 July 2026?
- PPL work test explained
- When can I claim PPL — the pre-birth claim window
- Adjusted Taxable Income (ATI) explained
Sources: Services Australia — Meeting the income test, DSS PPL Guide §2.3 — Income test, DSS PPL Guide §1.1.R.10 — Reference income year.