The Medicare Levy, which helps to fund Medicare, is a 2% income tax that's paid by most Aussies earning over $29,033. Some will be eligible for a partial or full exemption from the levy.
The Medicare Levy is charged at 2% of your annual income and goes towards funding Medicare.
You usually need to pay the full percentage if you earn over $32,500 as a single or $54,087 as a family.
However, you may get an exemption if you are a low-income earner or a reduction if you are a senior citizen.
What's the difference between the Medicare Levy and the Medicare Levy Surcharge?
The Medicare Levy is a 2% tax that goes towards funding the public health system. You pay a Medicare Levy in addition to the tax you pay on your taxable income. Most of us have to pay it unless we earn less than $26,000 a year.
The Medicare Levy Surcharge, on the other hand, is a tax that only applies if you earn over $97,000 a yearor $194,000 as a family (plus $1,500 per dependent child) and don't take out private hospital cover. It was put in place to encourage more Australians to take out private health insurance and alleviate the strain on the public healthcare system.
How much is the Medicare Levy?
The Medicare Levy is a flat 2% income tax for any earnings above the threshold set by the Australian Tax Office (ATO). These are the most recent figures, for 2024-25:
Medicare Levy 2025: When you pay
Singles – $26,000
If you're single and your income is below $26,000, you won't pay the levy. You'll pay part of the Medicare Levy if your taxable income is between $26,000 and $32,500. The full 2% applies on anything over $32,500.
Families – $43,846
For couples or single-parent families, the levy is reduced on any taxable income between $43,846 and 54,087 plus $4,027 per dependent child. The levy won't be charged if you earn less than $43,846 as a family.
Seniors – $41,089
For seniors who are eligible for the seniors and pensioners tax offset, you pay the levy on any taxable income above $41,089. The 2% rate kicks in once you earn more than $51,361.
Calculate your levy
To find out how much you'll need to pay, check out the ATO's Medicare Levy calculator. This allows you to estimate your Medicare Levy for the past four income years. Just have the following details handy:
Your taxable income
Your spouse or partner's taxable income (if any)
If you're eligible for a Medicare Levy exemption
Medicare Levy exemption
The Medicare Levy exemption is open to some Australians. Depending on your circumstances, you may be entitled to a full or partial exemption.
Who is exempt from the Medicare Levy?
You're exempt from paying the Medicare Levy in the 2024-2025 year if:
Your taxable income is greater than the lower threshold but less than the upper threshold
Your taxable income is greater than the lower threshold amount but you had a spouse
Your taxable income is greater than the lower threshold amount but you're entitled to an Invalid and Invalid Carer tax offset
Your taxable income is greater than the lower threshold amount but you were the sole carer of one or more dependent children
Full and half exemptions are available for blind pensioners, those on a Centrelink sickness allowance, and anyone wiht full free medical treatment under Defense Force arrangements or a Veterans' Affairs Repatriation Health Card (Gold Card). The requirements to qualify for these exemptions will depend on your marital status and whether you have any dependents or not.
It's worth remembering that even though you may not qualify for a Medicare Levy reduction based on your single income, you may still be eligible for a reduced levy based on your family's taxable income. If you're still unsure whether you qualify for an exemption head over to the Australian Tax Office or have a chat with your tax agent or accountant.
How to claim Medicare Levy exemption
You can claim the Medicare Levy exemption when you lodge your tax return. You'll be asked:
What your annual income was (which will help determine your Medicare Levy exemption entitlements)
How many dependent children you had during the year
How many days you can claim a full exemption and how many days you can claim a half exemption
If you had a spouse at any time in 2024-2025, married or de facto
If you're entitled to any seniors tax offset
Should you get private health insurance on top of Medicare?
Unfortunately, Medicare doesn't cover everything – but private health insurance can help fill in the gaps. It can cover you for things like ambulance transportation,dental and optical, and often gives you access to treatment quicker than the public system.
All prices are based on a single individual with less than $97,000 income and living in Sydney.
Frequently asked questions
The Medicare Levy is a 2% tax on your income to help fund Medicare, Australia's public health system. It is seperate to the income tax you also pay. Your Medicare levy reduces or isn't paid at all if your income is below a certain amount.
Australian taxpayers help to pay for Medicare from their income tax. If you meet certain medical requirements, or if you aren't entitled to Medicare benefits, then you may be exempt from the levy.
It depends on your circumstances. Anyone with a taxable income that exceeds the minimum threshold of $36,705 has to pay the levy. But the threshold increases if you are entitled to the seniors and pensioners tax offset.
Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio
Gary Ross's expertise
Gary Ross has written 626 Finder guides across topics including:
With a background in writing across education, Web3, and finance, Cameron’s mission is to create content that speaks directly to readers in a way that’s easy to understand, helping them navigate complex topics with confidence. Cameron studied a Bachelor of Commerce, Economics and Marketing at Macquarie University, graduating in 2019. See full bio
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