myTax 2025 Medicare levy reduction or exemption

Things to know

Complete this section to work out whether you qualify for a Medicare levy reduction or exemption.

Australian residents for tax purposes are subject to a Medicare levy of 2.0% of their taxable income unless they qualify for a reduction or exemption.

We base a:

• Medicare levy reduction on your taxable income. In some cases, you may not have to pay the levy at all. If your taxable income is above the thresholds, you may still qualify for a reduction based on your family income.
• Medicare levy exemption on specific categories
  • you meet certain medical requirements
  • you're a foreign resident
  • you're not entitled to Medicare benefits

You need to consider your eligibility for a reduction or an exemption separately.

If you're not an Australian resident for tax purposes for the whole of 2024–25, you may be exempt from the Medicare levy.

Completing this section

At Personalise return, you don't need to make a selection to show Medicare levy reduction or exemption. It will always display at Prepare return.

At Prepare return, select 'Add/Edit' at the Medicare and private health insurance details banner.

At the Medicare levy reduction heading:

1. Show the Number of dependent children and students.
   For more information, see Working out your number of dependent children.
   
   Note: We may have populated this for you based on information previously provided to us. Check and correct if necessary.

At the Medicare levy exemption heading:

2. Indicate if you were in one of the exemption categories at any time during 2024–25.
   If Yes, go to step 3.
   If No, go to step 6.
3. Work out the number of days that you qualify for full exemption and then enter the number into Full 2% levy exemption – number of days.
4. Work out the number of days that you qualify for half exemption and then enter the number into Half 2% levy exemption – number of days.
5. If you entered one or more days in Full 2% levy exemption – number of days, answer the question Were you a temporary resident for Medicare purposes and have a Medicare entitlement statement from Services Australia?
   For more information about applying for a Medicare entitlement statement, see Claiming an exemption.
6. You have completed the Medicare levy reduction or exemption section and can go to the Medicare levy surcharge section.

We use this information to work out any Medicare levy reduction or exemption for you.

Medicare levy reduction – your number of dependent children

A dependent child is any child who was an Australian resident whom you maintained in 2024–25 and whose Adjusted taxable income (ATI) was less than the amounts in the table.

Table 1 – Dependent children – ATI thresholds

Category of dependent child	ATI if maintained for the whole year	ATI if not maintained for the whole year
Any child under 21 years old you maintained who wasn't a full-time student	For the first child: $1,786   For each additional child: $1,410	For the first child: $282 plus $28.92 for each week you maintained them For each additional child: $282 plus $21.70 for each week you maintained them
Any full-time student who was under 25 years old at a school, college or university	$1,786	$282 plus $28.92 for each week you maintained them

If you had a spouse on 30 June 2025, or your spouse died during 2024–25 and you didn't have another spouse on or before 30 June 2025, count all your dependent children.

If you were single or separated on 30 June 2025, count only the number of dependent children for whom you received the family tax benefit (FTB) during all or part of 2024–25. Count them even if you received only the rental assistance component of FTB Part A and you shared the care of the dependent child.

How we work out your Medicare levy reduction

We base your eligibility for a Medicare levy reduction on your and your spouse's taxable income and your number of dependent children.

Based on the information in your tax return, we'll work out any reduction for you.

If you would like to understand more about how we calculate the levy reduction, please use the following information.

Work out your individual Medicare levy threshold

Using Table 2, work out the Medicare threshold that applies to you.

Table 2 – Medicare levy thresholds for a single individual

Category	Lower threshold	Upper threshold
If you're entitled to the seniors and pensioners tax offset	$43,020	$53,775*
All other taxpayers	$27,222	$34,027

* The entitlement to the seniors and pensioners tax offset for singles ceases when the rebate income reaches $52,759.

If you have a spouse, you may not get the seniors and pensioners tax offset even if you meet all the eligibility conditions as we base the amount of the tax offset on your individual rebate income, not your combined rebate income. If you don't get the tax offset, merely being eligible for it won't entitle you to a Medicare levy reduction.

Work out where your circumstances fit

Using Table 3, work out your circumstances and how they apply to the calculation of the levy.

Table 3 – Where do you fit?

Your circumstance	What to do
Your taxable income is equal to or less than your lower threshold amount.	You don't have to pay the Medicare levy.
Your taxable income is greater than your lower threshold amount and less than or equal to your upper threshold amount.	You pay only part of the Medicare levy. We'll work it out. Go to Medicare levy exemption if you're single with no dependants to see if you qualify for an exemption.
Your taxable income is over your upper threshold amount, and you're single with no dependants.	You don't qualify for a reduction. Go to Medicare levy exemption to see if you qualify for an exemption.
Your taxable income is greater than your lower threshold amount but you: had a spouse had a spouse who died during 2024–25, and you didn't have another spouse in 2024–25 were entitled to an invalid and invalid carer tax offset in respect of your child, or at any time during 2024–25 had sole care of one or more dependent children or students.	You may be eligible for a Medicare levy reduction based on family taxable income. to work out your family taxable income, use worksheet 1 and to work out your family taxable income limit, use worksheet 2.

Family taxable income

Family taxable income is either:

• the combined taxable incomes of you and your spouse (including a spouse who died during 2024–25)
• your taxable income if you were a sole parent.

Worksheet 1 – Family taxable income

Row	Calculation	Amount
a	Your taxable income from Taxable income. If the amount is less than $0 (zero), write $0.	$
b	Your spouse's taxable income from Taxable income in their tax return (if applicable). If the amount is less than $0 (zero), write $0.	$
c	Add rows a and row b. This is your family taxable income.	$

Working out your family taxable income limit

Your family taxable income must be equal to or less than the following limits for you to qualify for a Medicare levy reduction.

Worksheet 2 – Family taxable income limit

Row	Calculation	Amount
d	If you're entitled to the seniors and pensioners tax offset, enter $74,857. For all other taxpayers, enter $57,383.	$
e	Number of dependent children (if applicable, see note).	Number:
f	Multiply row e by $5,270 (see note).	$
g	Family taxable income limit. Add the appropriate amount from row d to the amount at row f.	$

Note: If you're a sole parent, you can increase your family taxable income limit for a dependent child only if the family tax benefit is payable to you for that dependent child.

If your family taxable income at row c in worksheet 1 is equal to or less than your family taxable income limit at row g in worksheet 2, you qualify for a Medicare levy reduction.

Glossary

Adjusted taxable income

A person's adjusted taxable income is the sum of the following amounts:

• taxable income (excluding any assessable first home super saver released amount)
• reportable employer superannuation contributions
• deductible personal superannuation contributions
• adjusted fringe benefits total, which is the sum of both of the following
  • reportable fringe benefits amounts from employers exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986 multiplied by 0.53
  • reportable fringe benefits amounts from employers not exempt from fringe benefits tax under section 57A of the Fringe Benefits Tax Assessment Act 1986 
• certain tax-free government pensions or benefits received by the person
• target foreign income (income and certain other amounts from sources outside Australia not included in the person's taxable income or received as a fringe benefit)
• net financial investment loss (the amount where the person's deductions attributable to financial investments exceeds their total financial investment income)
• net rental property loss (the amount where the person's deductions attributable to rental property exceeds their rental property income)
• less, any child support payments the person provided to another person.

Maintaining a dependant

You maintained a dependant if any of the following applied:

• you both lived in the same house
• you gave them food, clothing and lodging
• you helped them to pay for their living, medical and educational costs.

If you had a spouse for the whole of 2024–25 and your spouse worked at any time during the year, we still consider you to have maintained your spouse as a dependant for the whole income year.

We consider you to have maintained a dependant even if the 2 of you were temporarily separated, for example, due to holidays or overseas travel.

If you maintained a dependant for only part of the year, it may impact on the number of days they are considered a dependant.

Shared care

You had shared care of a child if you, and your spouse (if you had one), cared for your child for some of the income year, and someone else, such as a former spouse, cared for the child for the rest of the income year.

If you received family tax benefit (FTB) Part B as part of a shared-care arrangement, you'll need to know your FTB shared-care percentage to calculate your spouse offset. Your FTB shared-care percentage is usually not the same as your ‘shared care percentage’ which appears on correspondence you have received from Services Australia.

If you don't know your FTB shared-care percentage, contact Services AustraliaExternal Link.

Sole care

Sole care means that you alone had full responsibility, on a day-to-day basis, for the upbringing, welfare and maintenance of a child or student. You're not considered to have sole care if you're living with a spouse (married or de facto) unless special circumstances exist. Generally, for special circumstances to exist, you must be financially responsible for the dependent child or student and have sole care without the support that a spouse normally provides.

Situations where special circumstances may arise include the following:

• You were married for some time during 2024–25 but
  • during 2024–25, you then separated from, or were deserted by, your spouse, and
  • for the remainder of 2024–25, you weren't in a de facto relationship.
• Your spouse was in prison for a sentence of 12 months or more.
• Your spouse is medically certified as being permanently mentally incapable of taking part in caring for the child or student.

If you're not sure whether special circumstances apply, contact us.

Spouse

Your spouse includes another person (of any sex) who, for 2024–25:

• you were in a relationship with that was registered under a prescribed state or territory law
• although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.