Medicare levy - what is it?

Medicare is the scheme that gives Australian residents access to health care. To help fund the scheme, resident taxpayers pay a Medicare levy. The amount of levy you pay is based on your taxable income and is in addition to your income tax. It isn't reduced by any tax offsets you may be entitled to unless they are refundable tax offsets.

Normally, your Medicare levy is calculated at 1.5% of your taxable income but this rate may vary depending on your circumstances. In some cases you may be exempt from the levy or it may be reduced. There is a threshold amount below which you don't pay any Medicare levy. This also varies with your circumstances.

Individuals and families on higher incomes who do not have private patient hospital cover may have to pay the Medicare levy surcharge. This surcharge is in addition to the Medicare levy. It is calculated at the rate of 1% of your taxable income (including your total reportable fringe benefits).

The Medicare levy is withheld from your pay by your payer along with the tax you need to pay.

People who are not Australian residents for tax purposes do not pay the Medicare levy because they are not entitled to Medicare benefits.

What to read/do next

• Medicare levy reduction or exemption
• Medicare levy calculator
• Tax offsets - what are they?