Most Australian residents pay a Medicare levy of 2% of their taxable income on top of income tax. If your income is low, you pay less or none at all. The point where the levy starts is the Medicare levy threshold. For 2025–26, a single person pays no Medicare levy on taxable income of $28,011 or less.
This guide covers the 2025–26 thresholds (the year you're lodging for now), how the reduced levy is worked out, and how the levy differs from the Medicare levy surcharge, a separate charge with much higher thresholds.
Our tax return accountants apply the right threshold for you, including the family and SAPTO thresholds, and check whether you qualify for an exemption.
Medicare levy thresholds for 2025–26
There are two thresholds. At or below the lower threshold, you pay no levy. Between the lower and upper thresholds, you pay a reduced levy. Above the upper threshold, you pay the full 2%.
Singles: no levy on taxable income of $28,011 or less; a reduced levy up to $35,013; the full levy above that.
Singles entitled to the seniors and pensioners tax offset (SAPTO): no levy at $44,268 or less; a reduced levy up to $55,335.
Families: no levy on family taxable income of $47,238 or less, plus $4,338 for each dependent child; a reduced levy up to $59,047, plus $5,423 for each dependent child.
Families entitled to SAPTO: no levy at $61,623 or less; a reduced levy up to $77,028.
The thresholds rise each year, usually announced in the Federal Budget and applied back to the start of the income year. You can check the current figures on the ATO's Medicare levy reduction page.
How the reduced levy is worked out
If your taxable income is between the lower and upper thresholds, the levy is phased in. Instead of 2% of your whole income, you pay 10% of the amount over the lower threshold. At the upper threshold the two amounts meet, and above it the full 2% applies.
Example: Angie is single, has no dependants and isn't entitled to SAPTO. Her 2025–26 taxable income is $29,000, which is $989 over the $28,011 threshold. Her Medicare levy is 10% of $989, or $98.90, instead of $580 at the full 2%.
Example: Ben is single with a taxable income of $60,000, well above the upper threshold. He pays the full levy: 2% of $60,000, or $1,200.
You don't apply for the reduction. The ATO works it out when you lodge your tax return, using the details you give about your spouse's income and any dependants.
The family threshold
If your own taxable income is above $35,013 ($55,335 if you're entitled to SAPTO), you may still get a reduction based on family income. You need to have had a spouse (married or de facto) during the year, or sole care of one or more dependent children. Family taxable income is your and your spouse's taxable income combined, or just yours if you're a sole parent.
Example: Priya earns $40,000 and her partner earns $15,000, and they have two dependent children. Their family taxable income is $55,000. Their lower family threshold is $47,238 + (2 × $4,338) = $55,914. Because their family income is below that, Priya pays no Medicare levy for 2025–26, even though her own income is above the single threshold.
Medicare levy exemptions
An exemption is different from a reduction. You may be fully or partly exempt from the Medicare levy if, for example, you were a foreign resident, you weren't entitled to Medicare benefits (as with some temporary visa holders), or you met certain medical requirements, such as being a blind pensioner. Some exemptions need a Medicare Entitlement Statement from Services Australia. Our guide to the Medicare levy exemption form explains how to claim one.
Holding a concession card, such as a Health Care Card or Pensioner Concession Card, doesn't on its own exempt you from the levy. Low income is handled through the reduction thresholds above.
Medicare levy vs Medicare levy surcharge
The Medicare levy surcharge (MLS) is a separate charge of 1% to 1.5%, paid by higher earners who don't hold an appropriate level of private hospital cover. Its thresholds are much higher: from 1 July 2026, it applies to income for MLS purposes above $105,000 for singles and $210,000 for families. That income figure adds back reportable fringe benefits, reportable super contributions and net investment losses, so it can be higher than your taxable income. See how to avoid the Medicare levy surcharge.
Ways to lower your Medicare levy
The levy is worked out on taxable income, so anything that legitimately lowers your taxable income also lowers the levy: claiming all your work-related deductions, making personal deductible super contributions, or salary sacrificing into super. These cut your income tax too, so they're worth doing anyway. If your income is close to a threshold, a deduction can take you into the reduced-levy range. Our guide on how to reduce your taxable income covers the main options.
To see your income tax and Medicare levy together, try our tax calculator.
Need help with the Medicare levy?
If you're not sure whether you qualify for a reduction or an exemption, contact Australia Wide Tax Solutions. We'll check your thresholds, claim any exemption you're entitled to, and make sure the levy on your return is right.
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