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 $26,000 and families earning above $43,846 (plus $4,027 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.