Medicare levy 

Overview 

The Medicare Levy is a tax that supports Australia’s Medicare system. Most Australian citizens pay the Medicare Levy at 2% of their taxable income, while some may be eligible for a reduction or exemption. 

How does the Medicare levy work? 

The Medicare Levy is often calculated as a percentage of your taxable income and collected through the Australian tax system. Your final Medicare Levy liability is calculated after your income tax return is assessed. 

It is separate from the Medicare Levy Surcharge (MLS), which may apply to some higher-income earners without an appropriate private patient hospital cover. 

 The Medicare levy: 

1. Is typically calculated at 2% of taxable income. 

2. Is collected as part of the tax system. 

3. May be reduced for people on lower incomes. 

4. May not apply in full to people who meet certain exemption criteria. 

5. Is separate from the Medicare Levy Surcharge. 
    

Who pays the Medicare levy? 

You may have to pay the Medicare Levy if: 

1. You are an Australian resident for tax purposes. 

2. You earn enough money to be taxed. 

3. You are not eligible for a full Medicare levy exemption. 

Some people may qualify for a reduction depending on their income, family circumstances and other factors. 

How much is the Medicare levy? 

The standard Medicare levy rate is 2% of taxable income. However, if you qualify for a Medicare Levy reduction, your actual bill may be lower, and some people may be fully exempt. For example, if the full 2% rate applied to taxable income of $60,000, the Medicare Levy would be $1,200. Your actual liability may vary according to your circumstances and the applicable thresholds and rules for the relevant financial year.  

Medicare levy vs Medicare levy surcharge 

Who may be exempt from the Medicare levy? 

You may be entitled to a full or partial exemption in certain circumstances:  

1. You are a foreign resident for tax purposes for the relevant period. 

2. You are not entitled to Medicare benefits. 

3. You meet certain medical exemption requirements. 

4. You meet other prescribed eligibility requirements. 

When do you pay the Medicare levy?

The Medicare levy is typically calculated when you file your annual income tax return. The Australian Taxation Office (ATO) analyses the information in your tax return to calculate how much Medicare Levy you must pay, including whether you are eligible for a reduction or exemption. 
 
 If you are an employee, amounts may also be accounted for through the tax deducted from your earnings over the year. 

Things to know about the Medicare levy 

1. The standard Medicare Levy rate is 2% of taxable income. 

2. The Medicare Levy is different from the Medicare Levy Surcharge. 

3. Lower-income earners may qualify for a reduced levy or may not have to pay it. 

4. Some individuals may qualify for a full exemption. 

5. Your family circumstances may influence whether you qualify for a reduction. 

6. Medicare Levy regulations and income levels may change between financial years. 

7. Your Medicare Levy is often calculated as part of your income tax return. 

8. The ATO is the greatest resource for determining your specific Medicare Levy liability. 

Note: The content on this page is for information only. In case of emergency, call triple zero (000). – 

Update on :- 15 September 2026,  

Source: –   

 Australian Taxation Office (ATO) – Understanding the Medicare levy and Medicare levy surcharge 
ATO – Medicare levy and Medicare levy surcharge  

Services Australia – Medicare and tax 
Services Australia – Medicare and tax  

Australian Taxation Office – Medicare levy reduction and exemption 
ATO – Medicare levy reduction and exemption  

Australian Taxation Office – Medicare levy questions 
ATO – Medicare levy questions  

Australian Taxation Office – Medicare levy exemption and reduction information 
ATO – Medicare levy exemption and reduction