Family Tax Benefit Income Test: 2026–27 Rules, Tapers & ATI
The Family Tax Benefit income test uses your family's Adjusted Taxable Income (ATI) to determine how much FTB you receive. Under Method 1, if your combined family income is $69,131 or less, you get the maximum rate. Every dollar earned between $69,131 and $123,078 reduces your payment by 20 cents until you reach the base rate. Under Method 2 (for income above $123,078), your base rate payment reduces by 30 cents per dollar until reaching zero.
Key Facts at a Glance (2026–27)
- ATI includes taxable income, fringe benefits, reportable super, net investment losses, and foreign income.
- First taper: 20 cents per dollar above $69,131.
- Second taper: 30 cents per dollar above $123,078 (+ $4,891 for each additional child).
- Maintenance income over the free area reduces Part A above the base rate by 50 cents in the dollar.
1. What is Adjusted Taxable Income (ATI)?
Family Tax Benefit is assessed against your household's Adjusted Taxable Income (ATI). ATI is broader than basic taxable income and prevents individuals from using tax deductions or salary sacrifice packaging to artificially reduce their income for Centrelink purposes.
ATI Formula Components
- Taxable Income: Your gross earnings minus allowable tax deductions.
- + Reportable Fringe Benefits: Grossed-up employer fringe benefits (e.g. novated car leases, meal cards).
- + Reportable Superannuation Contributions: Salary sacrificed super contributions.
- + Total Net Investment Losses: Rental property losses and financial investment deductions.
- + Tax-Free Pensions & Benefits: Certain disability pensions or veteran payments.
- + Target Foreign Income: Foreign earnings not taxed in Australia.
- - Deductible Child Maintenance: Child support you paid to another person for a child.
2. Part A Income Test: Method 1
Method 1 applies when your family ATI is up to $123,078:
- Income Free Area: If combined family ATI is $69,131 or less, you receive the full maximum rate.
- 20% Taper Rate: If combined ATI exceeds $69,131, your maximum entitlement reduces by 20 cents for each dollar over $69,131.
- Base Rate Floor: The reduction stops once your payment reaches the base rate ($75.60/fn per child). Your payment remains at the base rate as long as your income is between the point the taper hits base and the higher income threshold.
3. Part A Income Test: Method 2
Method 2 applies when your family ATI exceeds $123,078 (plus $4,891 for each additional FTB child after the first):
- 30% Taper Rate: Your base rate payment reduces by 30 cents for every dollar over the higher income threshold until your payment reaches $0.
4. Maintenance Income Test (MIT)
If you receive child support or maintenance from a former partner, the Maintenance Income Test applies to your FTB Part A above the base rate:
- Maintenance Free Area: $1,930.85 per year for a single parent (plus $643.60 for each additional child).
- 50% Taper Rate: Every dollar of child support received above the free area reduces your Part A by 50 cents, down to the base rate. Child support cannot reduce your payment below the base rate.
5. Fringe Benefits & Salary Sacrificing
A common misconception among Australian workers is that salary sacrificing into superannuation or packaging a vehicle reduces income for Family Tax Benefit. Because Centrelink adds back reportable superannuation and grossed-up fringe benefits, your Adjusted Taxable Income will reflect these benefits, and your payment will not artificially increase.
Official Legislative References & Sources
- Services Australia - Income test for FTB Part A (Services Australia, verified September 2026)
Frequently Asked Questions
Practical answers to common questions about Family Tax Benefit rules, eligibility, and payments.
Under Adjusted Taxable Income (ATI) rules, total net investment losses from rental properties or financial investments are added back to your taxable income. You cannot use negative gearing deductions to reduce your income for Family Tax Benefit.
Related Family Tax Benefit Resources
Explore specific rules, rate tables, and income tests for 2026–27.