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Medicare levy

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It's an amount paid by the taxpayers to help fund Medicare. It is calculated at a flat rate of 2% of a taxpayer's taxable income over a certain level.

The Medicare levy low income threshold is $20,896 for individuals and $33,044 for senior Australian and pensioner tax offset claimants. But it is different for couples with dependent children and couples with no children.

Medicare Levy Reduction

If someone's taxable income is below a certain level then Medicare Levy will be reduced, in some cases they don't need to pay at all. If taxable income is higher than the threshold, he/she may qualify for reduction based on his/her family taxable income.

If individual's taxable income is equal or less than $20,896 then he/she don't need to pay Medicare levy ($33,044 for seniors and pensioners).

Tax payer's need to pay only a part of the Medicare levy if taxable income is between $20,896 and $26,121 for individuals and $33,044 and $41,306 for seniors and pensioners.

If taxable income is above $26,120, one may still qualify for reduction based on his/her family taxable income.

Medicare Levy Income Thresholds at a glance

Taxable Income

Medicare levy payable


Senior Australian and Pensioner Tax Offset claimants

$0 - $20,896

$0 - $33, 044


$20,896 - $26,121

$33,044 - $41,306

10% of excess over $20,896 for individual & $33,044 for seniors

$26,121 and above

$41,306 and above

2% of entire taxable amount

The point to be noted that non-residents are not liable to pay the Medicare levy and if any resident has private health insurance, still he/she needs to pay the levy.

If someone is not qualified for Medicare levy reduction, he/she may qualify for Medicare levy exemption.

Medicare Levy Exemption

Depending on the circumstance some taxpayers are exempt from paying the levy. There are three categories for Medicare levy exemption. These are:

Category 1: Medical exemption (applies to people such as blind pensioners)

Category 2: Foreign and Norfolk Island residents

Category 3: Not entitled to Medicare benefits (have Medicare levy exemption certificate from Medicare Australia)

If someone has dependents, exemption is also applicable considering the circumstances of dependents.

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