Things you need to know
Australian residents for tax purposes are subject to a Medicare levy of 2% of their taxable income unless they qualify for a reduction or exemption. See, Your tax residency
If you're not an Australian resident for tax purposes for the whole of 2024–25, you may be exempt from the Medicare levy. To work out whether you’re exempt, see Part B – Medicare levy exemption.
We base a:
- Medicare levy reduction on your taxable income
- Medicare levy exemption on specific categories.
You need to consider your eligibility for a reduction or an exemption separately.
Complete Part A to work out if you can claim the Medicare levy reduction. If you aren't eligible for a reduction.
Complete Part B to work out if you can claim a Medicare levy exemption.
If you want to work out the amount of Medicare levy you have to pay, you can use our Medicare levy calculator.
Part A – 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.
Your taxable income must be equal to or less than the relevant upper threshold in table 1 for you to qualify for a reduction. If your taxable income is equal to or less than the relevant lower threshold, you don't pay the Medicare levy.
We'll work out any reduction for you. To work out how to complete your tax return, see Your circumstances and what to do next.
|
Category |
Lower threshold |
Upper threshold |
|---|---|---|
|
If you're entitled to the seniors and pensioners tax offset (see T1 Seniors and pensioners tax offset 2025) |
$43,020 |
$53,775 |
|
All other taxpayers |
$27,222 |
$34,027 |
Note: The entitlement to the seniors and pensioners tax offsets ceases when 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.
|
Your circumstance |
What to do |
|---|---|
|
Your taxable income is equal to or less than your lower threshold amount. See, Table 1. |
You don't have to pay the Medicare levy. Don't write anything at question M1 in your tax return. Go to, Where to go next. |
|
Your taxable income is greater than your lower threshold amount and less than or equal to your upper threshold amount. See, Table 1. |
You pay only part of the Medicare levy. We will work it out. |
|
Your taxable income is over your upper threshold amount, and you're single with no dependants. See, Table 1. |
You don't qualify for a reduction. |
|
Your taxable income is greater than your lower threshold amount but you:
See, Table 1. |
You may be eligible for a Medicare levy reduction based on family taxable income:
|
Definition of sole care
Sole care means that you alone have 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're married at any time during 2024–25 but
- during 2024–25, you separate from, or are deserted by, your spouse, and
- for the remainder of 2024–25, you aren't in a de facto relationship.
- Your spouse is 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.
Working out your number of dependent children
A dependent child is any child who is an Australian resident who you maintain in 2024–25 and whose adjusted taxable income (see Adjusted taxable income for you and your dependants 2025) is less than the amounts in the table.
|
Category of dependent child |
ATI if not maintained for the whole year |
ATI if maintained for the whole year |
|---|---|---|
|
Any child under 21 years old you maintain who isn't a full-time student |
For the first child:
For each additional child:
|
For the first child:
For each additional child:
|
|
Any full-time student who is under 25 years old at a school, college or university |
$282 plus $28.92 for each week you maintain them |
$1,786 |
If you have a spouse on 30 June 2025, or your spouse dies during 2024–25 and you don't have another spouse on or before 30 June 2025, count all your dependent children.
If you're single or separated on 30 June 2025, count only the number of dependent children for who you receive the family tax benefit (FTB) during all or part of 2024–25. Count them even if you receive only the rental assistance component of FTB Part A and you share the care of the dependent child.
Write the number of dependent children you had during 2024–25 at Worksheet 2 – row e.
Family taxable income
Family taxable income is either:
- the combined taxable incomes of you and your spouse (including a spouse who dies during 2024–25)
- your taxable income if you're a sole parent.
Working out your family taxable income limit
Your family taxable income must be equal to or less than the limit in worksheet 2 for you to qualify for a Medicare levy reduction.
|
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). |
Children |
|
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.
Is your family taxable income at worksheet 1 – row c equal to or less than your family taxable income limit at worksheet 2 – row g?
- Yes – You qualify for a Medicare levy reduction. Go to Step 1.
- No – You don't qualify for a reduction. Go to Part B to see if you qualify for an exemption.
Completing your tax return – Medicare levy reduction
To complete this question, follow the steps.
Step 1
If you have a spouse on 30 June 2025, or your spouse dies during 2024–25 and you don't have another spouse on or before 30 June 2025, write your spouse's taxable income at question Spouse details – married or de facto – label O in your tax return. If your spouse has no taxable income, write 0 (zero).
Step 2
Write the number of your dependent children (from worksheet 2 – row e) at question M1 – label Y. If you have none, write 0 (zero).
We work out the reduction for you, using your spouse details and number of dependent children.
Read on to see if a Medicare levy exemption applies to you for all or part of 2024–25.
Part B – Medicare levy exemption
You may qualify for a Medicare levy exemption if you're in any of the following 3 exemption categories at any time in 2024–25. These categories are:
If you don't fit into one of the exemption categories, leave question M1 – labels V and W blank and go to Where to go next.
For the Medicare levy exemption (but not the reduction), dependant means an Australian resident you maintain who is any of the following:
- your spouse
- your child under 21 years old
- your child, 21 to 24 years old, who receives full-time education at a school, college or university and whose adjusted taxable income (ATI), for the period you maintain the child is less than the total of $282 plus $28.92 for each week you maintain them.
For the meaning of maintaining a dependant and ATI, see Adjusted taxable income for you and your dependants 2025.
If the parents of a child live separately and apart for all or part of 2024–25 and the child is a dependant of each of them, treat the child as an equal dependant of each parent (irrespective of the number of days the child is in each parent's care). However, where a parent receives FTB Part A for the child, even if receiving only the rental assistance component, the child is a dependant of that parent for the number of days the child is in their care.
Category 1: Medical
You're in this exemption category and can claim a full or half exemption if one of the following applies during all or part of 2024–25, you're:
- a blind pensioner
- entitled to full free medical treatment for all conditions under defence force arrangements or Veterans' Affairs Repatriation Health Card (Gold Card).
During the period you met that condition, you also meet one of the following conditions in the table.
|
Additional condition met |
Exemption that applies |
|---|---|
|
You have no dependants. |
Full |
|
Each of your dependants (including your spouse if you have one) either:
|
Full |
|
You have dependent children who aren't in an exemption category but who are also dependants of your spouse, and your spouse either:
|
Full |
|
You have at least one dependant (for example, a spouse) who both:
|
Half |
|
You're single or separated and you:
Then exemption from the Medicare levy is for the days that you have care of your dependent child. |
Half |
|
You're single or separated and you:
Then exemption from the Medicare levy is for the days that you don't have care of your dependent child. |
Full |
|
You have a spouse who meets at least one of the Category 1: Medical conditions and you have a dependent child who:
In this case, either you or your spouse can claim a full exemption and the other can claim a half exemption by completing a family agreement. |
Full or Half |
If you're in this exemption category, go to Step 1.
Family agreements
A family agreement is a written agreement signed by you and your spouse. You complete a family agreement only if both you and your spouse would have to pay the Medicare levy were it not for your exemption category status. You don't need to send this agreement to us. Keep it with your records. The agreement must contain:
- the statement 'We agree that the Medicare levy exemption in respect of our dependants for 2024–25 will be claimed as follows'
- name of person claiming the full exemption
- name of person claiming the half exemption
- your signature
- your spouse's signature.
The agreement must be signed before the date of the person claiming the full exemption lodges their tax return, unless the Commissioner allows further time.
Category 2: Foreign resident
If you're a foreign resident for tax purposes for the whole of 2024–25, you can claim a full exemption (365 days).
If you're a foreign resident for only part of 2024–25, you can claim a full exemption for that period, if either:
- you don't have any dependants for that period
- all your dependants are in an exemption category for that period.
If you're in this exemption category, go to Step 1.
Category 3: Not entitled to Medicare benefits
You can claim a full exemption for any period for which you have a Medicare entitlement statement from Services Australia showing you aren't entitled to Medicare benefits because you're a temporary resident for Medicare purposes, and either:
- you don't have any dependants for that period
- all your dependants are in an exemption category for that period.
To claim an exemption, you must first submit a Medicare Entitlement Statement to Medicare and receive a certification letter from them saying that you aren't entitled to Medicare benefits for a particular period. You can then claim the exemption for the period that Medicare advises.
You need to submit a Medicare entitlement statement to Medicare each income year you want to claim an exemption for.
You also qualify for a full exemption under this category if:
- you're a member of a diplomatic mission or consular post in Australia (or a member of such a person's family and you're living with them)
- you aren't an Australian citizen
- you don't ordinarily live in Australia, and either
- you don't have any dependants for that period
- all your dependants are in an exemption category for that period.
If you're in this exemption category, go to Step 1.
If you aren't in any of the exemption categories leave question M1 – labels V and W blank. You have finished this question, go to Where to go next.
Completing your tax return – Medicare levy exemption
Use the information in the categories to work out whether you qualify for a full exemption or a half exemption and to determine how many dependent children you have during the income year.
To complete this question, follow the steps.
Step 1
Work out the number of days for which you can claim a full exemption and the number of days for which you can claim a half exemption.
The maximum total number of days you can claim is 365. If you have overlapping qualifying periods, count the days in those overlapping periods only once. If a full exemption period overlaps a part exemption period, count the overlapping days as a full exemption period.
Step 2
Write the number of days you qualify for a full exemption at question M1 – label V.
Write the number of days you qualify for a half exemption at question M1 – label W.
If you're a temporary resident for Medicare purposes and have a Medicare Entitlement Statement from Services Australia covering a period in 2024–25 (see Category 3), then print C in the CLAIM TYPE box. If you don't fall within this category, leave the CLAIM TYPE box blank.
We will work out your exemption entitlement.
Step 3
If you have a spouse at any time in 2024–25, you must complete question Spouse details – married or de facto in your tax return.
Where to go next
- Go to question M2 Medicare levy surcharge 2025.
- Return to main menu Individual tax return instructions 2025.
- Go back to Total tax offsets 2025.