What Is the Medicare Levy?
The Medicare levy is a flat 2% tax on your taxable income that helps fund Medicare — Australia's public healthcare system. It's separate from income tax and is calculated on top of it.
| Situation | Threshold | Levy |
|---|---|---|
| Single, no dependants | $26,000 | Nil below threshold, 2% above |
| Phase-in range | $26,001 – $32,500 | 10% of amount over $26,000 |
| Full levy | $32,501+ | 2% of taxable income |
| Family threshold | $43,846 | Plus $4,027 per dependent child |
Exemptions
You may be exempt if you're a Norfolk Island resident, a foreign resident with no Medicare entitlement, or you've served in the defence forces. You can claim a full or partial exemption when you lodge your tax return.
Medicare Levy vs Medicare Levy Surcharge
The Medicare levy (2%) is different from the Medicare Levy Surcharge (1–1.5%). The surcharge is an additional charge for high earners who don't have private hospital cover. See our Medicare Levy Surcharge page for details.
Frequently Asked Questions
Do I have to pay the Medicare levy?
Most Australian residents pay it. You're exempt if your taxable income is under $26,000 (single) or you don't have Medicare entitlement.
Is the Medicare levy included in PAYG withholding?
Yes. Your employer's PAYG tax withheld already includes the Medicare levy. You don't pay it separately.
Can I opt out of Medicare and not pay the levy?
No. The Medicare levy is compulsory regardless of whether you use public healthcare. The only exemptions are income-based or residency-based.