Medicare Levy Reduction
A reduction or exemption from the Medicare levy for low-income earners, certain pensioners, and specific categories of people.
The Medicare levy reduction provides partial or full relief from the 2% Medicare levy for low-income earners. For 2025–26, singles with taxable income at or below $26,000 pay no Medicare levy. The levy phases in at 10 cents per dollar of income above $26,000, reaching the full 2% rate at approximately $32,500. Family thresholds are higher: $43,846 for couples (plus $4,027 per dependent child).
Full exemptions from the Medicare levy (not just reductions) are available to foreign residents who are not eligible for Medicare benefits, people who were in Australia on certain temporary visas, and those who held a valid Medicare Levy Exemption Certification during the year. Half-year exemptions apply if you were a resident for only part of the year.
To claim a reduction or exemption, you complete the relevant section of your tax return. If you're exempt for the full year, you answer "no" to the Medicare levy questions. The ATO pre-fills some of this information, but you should check it against your actual circumstances. Note that the levy reduction is separate from the Medicare Levy Surcharge — you can be exempt from the standard levy but still liable for MLS if your income exceeds the surcharge thresholds and you don't have private hospital cover.