Published for 2025-26 Indexed each 1 July
Medicare Levy Reduction
Not everyone pays the 2% Medicare levy. Below the lower threshold you pay nothing, above the upper threshold you pay all of it, and in between you pay a reduced amount worked out when you lodge.
Thresholds for 2025-26
| Your situation | Threshold range |
|---|---|
| All other taxpayers | $28,011 to $35,013 |
| Entitled to the Seniors and Pensioners Tax Offset | $44,268 to $55,335 |
These are the 2025-26 thresholds. The ATO page (last updated 30 June 2026) says "in 2025-26" - the 2026-27 figures are indexed on 1 July and had not been published when we checked. Check the current amounts before relying on them.
How a reduction works
The levy is not all-or-nothing. There are two shapes of relief:
- Below the lower threshold - you pay no Medicare levy at all. A single person on $28,011 or less pays nothing.
- Between the thresholds - the levy phases in. It is worked out on a formula by the ATO when you lodge, not by your employer during the year.
- Above the upper threshold - the full 2% applies.
Senior Australians get a much higher range - the higher thresholds on the next row exist so that people on the Age Pension or entitled to the Seniors and Pensioners Tax Offset are not pulled into the levy by modest extra income.
The senior thresholds are not an accident
The gap between the two rows is large: a single age pensioner does not start paying the levy until $44,268, almost $16,257 higher than everyone else. That is deliberate - it protects people whose income is largely a pension plus a small amount of investment income.
Related: entitlement to the Seniors and Pensioners Tax Offset for singles ceases once rebate income reaches $52,759 - which is why the senior Medicare levy range and SAPTO are usually discussed together.
Frequently asked questions
At what income do you stop paying the Medicare levy?
For a single person on the 2025-26 thresholds, you pay no Medicare levy at or below $28,011, and the full 2% once your taxable income passes $35,013.
Is it worked out by my employer?
No. The reduction is calculated by the ATO when you lodge your tax return - your employer withholds on the normal basis and any reduction comes back through your assessment.
Do seniors get a higher threshold?
Yes. If you are entitled to the Seniors and Pensioners Tax Offset, the lower threshold is $44,268 instead of $28,011, and the upper threshold is $55,335.
Do the thresholds change each year?
Yes, they are indexed on 1 July. That is exactly why we have labelled these as 2025-26 figures rather than presenting them as current.
Is the reduction the same as the Medicare levy surcharge?
No - they are opposite ends of the same levy. The reduction is relief for low incomes; the surcharge is an extra 1% to 1.5% for higher earners without private hospital cover.
From the Australian Taxation Office, checked 12 October 2026. General information only - not tax advice.