Medicare levy reduction – family income

Find out if you are eligible for a Medicare levy reduction based on your family income.

On this page

• Eligibility for Medicare levy reduction – family taxable income
• Dependent children for Medicare levy reduction purposes
• Family threshold for reduction
• Calculate your family taxable income
• Sole care definition

Eligibility for Medicare levy reduction – family taxable income

You may qualify for a Medicare levy reduction based on your family taxable income if both:

• your taxable income was more than $29,206 ($46,156 for seniors and pensioners entitled to the seniors and pensioners tax offset (SAPTO)) in 2021–22
• you either  
  • had a spouse (married or de facto)
  • had a spouse that died during the year, and you did not have another spouse before the end of the year
  • are entitled to an invalid and invalid carer tax offset in respect of your child
  • had sole care of one or more dependent children.
   

If you have a spouse, you may not get SAPTO even if you meet all the eligibility conditions. This is because the amount of the tax offset is based on your individual rebate income, not your combined rebate income. Even if you are eligible for SAPTO but do not get the offset, it doesn't entitle you to a Medicare levy reduction.

You can use the Medicare levy calculator to work out your Medicare levy payable.

Dependent children for Medicare levy reduction purposes

For Medicare levy reduction purposes, a dependent child is any child:

• you maintained who was an Australian resident, and
• whose adjusted taxable income was less than the amounts in the table below.

Family threshold for reduction

For 2021–22, your Medicare levy is reduced if your family taxable income is equal to or more than $39,402 or equal to or less than $49,252 ($64,251 if you are entitled to the SAPTO) plus $4,523 for each dependent child you have.

Calculate your family taxable income

Family taxable income is either:

• the combined taxable income of you and your spouse (including a spouse who died during the year)
• your taxable income if you were a sole parent.

If you received a superannuation lump sum payment when you reached your preservation age and were under 60 years old, the amount of the taxed element (not including the amount of any death benefit) that does not exceed your low-rate cap for the year is not included in your taxable income for Medicare levy purposes.

Your low-rate cap is the cap amount that applies to that year less any superannuation lump sums you received in previous years.

Sole care definition

Sole care means you alone had full responsibility for the upbringing, welfare and maintenance of a child or student.

You aren't considered to have sole care if you are living with a spouse (married or de facto) unless there are special circumstances. For example, if a spouse is medically incapable of assisting you with the care.