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.
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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 $29,033.
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 $23,226 a year.
The Medicare Levy Surcharge, on the other hand, is a tax that only applies if you earn over $97,000 a year 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 2020-21:
Medicare Levy 2021: When you pay
Singles – $23,226
If you're single and your income is below $23,226, you won't pay the levy. You'll pay part of the Medicare Levy if your taxable income is between $23,227 and $29,033. The full 2% applies on anything over $29,033.
Families – $39,167
For couples or single-parent families, the levy is reduced on any taxable income between $39,167 and $48,958, plus $4,496 per dependent child. The levy won't be charged if you earn less than $39,167 as a family.
Seniors – $36,705
For seniors who are eligible for the seniors and pensioners tax offset, you pay the levy on any taxable income above $36,705. The 2% rate kicks in once you earn more than $45,881.
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 if:
You are a foreign resident for tax purposes
You are not entitled to Medicare benefits
You earn under the lower threshold of $22,801
You qualify for a medical exemption
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 people who are entitled to full free medical treatment for all conditions under Defence Force arrangements or a Veterans' Affairs Repatriation Health Card (Gold Card). The requirements you must meet to qualify for this exemption vary depending on whether you are married or single, and whether you have any dependents.
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 2020–2021, 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.
Depending on your age, you may be eligible for an
aged-based discount. This is used to estimate your
rebate.
Under 65
65 - 69
70 or older
What's your household's taxable income?
This is the combined income you and your spouse earn before tax. It's needed to calculate the correct Australian government rebate.
$93,000 and under
$93,001 to $108,000
$108,001 to $144,000
$144,001 and over
What kind of health insurance do you need?
Combined (Extras + Hospitals)
Extras
Hospital
What level of hospital coverage would you like?
You can change this at any time later.
Legend
Covered
Restricted cover, You may be partially covered for
this category.
Not covered. Optional for insurer to include.
*Prices updated March 2024, in line with Finder's
database of health insurance policies. Prices are based
on a single individual with less than $93,000 income and
living in Sydney with a $750 excess.
What extras cover do you need? (Optional)
Select as many as you want or move to the next step
Preventative & general dental
Major dental & implants
Optical
Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
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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 pay the levy. But the threshold increases if you are entitled to the seniors and pensioners tax offset.
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Depending on your age, you may be eligible for an
aged-based discount. This is used to estimate your
rebate.
Under 65
65 - 69
70 or older
What's your household's taxable income?
This is the combined income you and your spouse earn before tax. It's needed to calculate the correct Australian government rebate.
$93,000 and under
$93,001 to $108,000
$108,001 to $144,000
$144,001 and over
What kind of health insurance do you need?
Combined (Extras + Hospitals)
Extras
Hospital
What level of hospital coverage would you like?
You can change this at any time later.
Legend
Covered
Restricted cover, You may be partially covered for
this category.
Not covered. Optional for insurer to include.
*Prices updated March 2024, in line with Finder's
database of health insurance policies. Prices are based
on a single individual with less than $93,000 income and
living in Sydney with a $750 excess.
What extras cover do you need? (Optional)
Select as many as you want or move to the next step
Preventative & general dental
Major dental & implants
Optical
Physiotherapy
Podiatry
Non-PBS pharmaceuticals
Chiropractic
Emergency ambulance
Remedial massage
Email me my results (optional)
To get a copy of your results for later, add your email below
