What is the Medicare levy rate and who has to pay it in 2024-25?

The Medicare levy is a 2% levy on your taxable income that helps fund Australia's public healthcare system, Medicare. Most Australian residents for tax purposes are required to pay the Medicare levy.

How it is calculated:

The levy is simply 2% of your taxable income. For example, if your taxable income is A$80,000, your Medicare levy is A$1,600. It is calculated on your tax return and collected by the ATO along with your income tax.

Who pays the Medicare levy:

• All Australian residents for tax purposes with taxable income above the low-income thresholds
• It applies to your entire taxable income, not just the amount above a threshold (though it phases in for low-income earners to avoid a sudden jump)

Who may be exempt or pay a reduced amount:

• Low-income earners: The Medicare levy reduces to zero for individuals with taxable income at or below A$26,000 for 2024-25. It phases in for incomes between A$26,000 and A$32,500.
• Seniors and pensioners: Higher thresholds apply. Singles eligible for SAPTO have a threshold of A$41,089, phasing in up to A$51,361.
• Families: The family threshold is A$43,846 plus A$4,027 for each dependent child or student for 2024-25.
• Foreign residents: If you are a non-resident for tax purposes, you are generally exempt from the Medicare levy
• Specific exemptions: If you were not entitled to Medicare benefits for the full year (for example, certain visa holders), you can apply for a Medicare levy exemption by obtaining a Medicare Entitlement Statement

The Medicare levy is separate from the Medicare levy surcharge (MLS), which is an additional charge for higher-income earners without private hospital cover.