Medicare levy
The Medicare levy is generally 2% of your taxable income for Australian residents. There are low‑income reductions and family thresholds that can reduce it (or make it $0).
1) When it applies
In general, Australian residents pay the Medicare levy. Foreign residents generally don’t pay the Medicare levy.
There are also separate rules for Medicare levy exemptions (not yet fully modelled in OzMoneyTools).
2) Low‑income reduction (singles)
The ATO publishes yearly thresholds. If your taxable income is at or below the lowerthreshold, the levy is $0. Between the lower and upper thresholds, the levy is reduced (shades in).
| 2024–25 category | Lower threshold | Upper threshold |
|---|---|---|
| All other taxpayers | $27,222 | $34,027 |
3) Low‑income reduction (families)
If you have a spouse or dependent children, the ATO uses family taxable incomethresholds. The thresholds increase with dependent children.
| 2024–25 family thresholds | Amount |
|---|---|
| Lower family threshold | $45,907 |
| Upper family threshold | $57,383 |
| Add per dependent child (lower) | +$4,216 |
| Add per dependent child (upper) | +$5,270 |
4) How OzMoneyTools estimates it
We apply the standard 2% levy for residents.
When we have confirmed ATO thresholds for a tax year, we apply the low‑income reduction (shade‑in) for singles and families. If thresholds for a year aren’t loaded yet, we default to the full 2%.
If you need exact withholding per pay run, the ATO tax withheld calculator (or payroll software) will be closer than an annual estimate.
FAQ
Is the Medicare levy the same as Medicare Levy Surcharge (MLS)?
Why might my Medicare levy be lower than 2%?
Sources
- ATO: Medicare levy and reduction for low-income earners: ato.gov.au
- ATO: Medicare levy reduction thresholds (singles): ato.gov.au
- ATO: Medicare levy reduction – family income: ato.gov.au