Medicare Levy
A 2% levy on taxable income to help fund Australia's public healthcare system, Medicare.
The Medicare levy is a 2% charge on your taxable income that helps fund Australia's universal public healthcare system, Medicare. It is calculated on top of your income tax and applies to most Australian residents for tax purposes. For 2025–26, the full 2% levy applies to singles earning above $28,011 and families earning above $47,238 (plus $4,338 per dependent child).
If your income is below the low-income threshold, you may qualify for a Medicare levy reduction or full exemption. The levy phases in at 10 cents per dollar for income between the shade-in threshold and the full-rate threshold. Some individuals are exempt from the levy entirely, including foreign residents (who are not eligible for Medicare), and those with specific exemptions (e.g., holders of a Medicare Entitlement Statement showing exemption category).
The Medicare levy is separate from the Medicare Levy Surcharge (MLS), which is an additional charge of 1%–1.5% on higher-income earners who don't hold private hospital cover. Together, these levies can add up to 3.5% on top of income tax for high earners without private health insurance.
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Medicare Levy Surcharge (MLS)
An additional 1%–1.5% surcharge on higher-income earners who don't hold private hospital insurance.
Medicare Levy Reduction
A reduction or exemption from the Medicare levy for low-income earners, certain pensioners, and specific categories of people.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Private Health Insurance Rebate
A government rebate that reduces the cost of private health insurance premiums, means-tested based on income and age.
Taxable Income
Your assessable income minus allowable deductions — the figure used to calculate your income tax.