Medicare Levy and Your Australian Tax Refund: A Clear Guide

Ordinary Medicare levy in 2025–26

The ordinary levy helps fund Medicare and is generally 2% of taxable income. For 2025–26, an individual who is not using the senior or pensioner threshold pays no ordinary levy at taxable income of $28,011 or less. A phase-in calculation applies above that lower threshold before the full 2% amount is reached.

The family, dependent-child and senior or pensioner tests use different thresholds. A quick individual calculator cannot infer spouse income, dependants or every exemption from a salary figure alone.

Example: Assume a single Australian resident has $30,000 of taxable income, no family-threshold adjustment and no exemption. The phase-in estimate is 10% of the $1,989 above $28,011, or $198.90. That is lower than 2% of $30,000 ($600), so the reduced levy is about $198.90.

Related guide: Estimate your tax refund →

Medicare levy surcharge is different

The Medicare levy surcharge may apply to taxpayers above relevant income thresholds who do not have an appropriate level of private patient hospital cover. It is not simply another flat 2% charge and should not be confused with the ordinary levy.

Because surcharge calculations can depend on income for surcharge purposes, family circumstances and days of cover, the ToolsFA quick calculator does not include it.

• ✓ Ordinary levy and surcharge are separate
• ✓ Private extras-only cover is not the same as hospital cover
• ✓ Family status can affect surcharge thresholds
• ✓ Part-year circumstances can affect the calculation

Related guide: HELP repayments in 2025–26 →

Exemptions and reductions

Some people may qualify for a full or half exemption for specific periods, including certain medical, residency or entitlement circumstances. Evidence and exact dates matter. Selecting an exemption in a calculator should reflect actual eligibility, not simply that you rarely used Medicare.

Example: Being healthy or not visiting a doctor does not by itself create a Medicare levy exemption. Eligibility depends on the statutory categories and the number of qualifying days.

Related guide: Tax residency and rates →

Use the ToolsFA calculator step by step

Choose Australian resident only when that rate schedule applies, then enter annual gross income, eligible deductions and PAYG tax already withheld in their separate fields. The calculator derives taxable income and shows the ordinary Medicare levy as its own line in the results.

Leave the Medicare levy exemption box off unless a full exemption applies to the whole estimate. The checkbox does not calculate half exemptions or apportion an exemption by qualifying days. The tool uses the 2025–26 ordinary single-person lower threshold and phase-in, but it does not calculate family or senior and pensioner reductions, the Medicare levy surcharge, private-health-insurance adjustments or every exemption category.

• ✓ Use annual figures for the 2025–26 income year
• ✓ Enter deductions separately rather than reducing salary yourself
• ✓ Use PAYG withholding only in the tax-withheld field
• ✓ Check the Medicare levy result separately from income tax and HELP
• ✓ Confirm family or part-year circumstances with the ATO

Example: To reproduce the $30,000 example, select Australian resident, enter income and deductions that produce $30,000 of taxable income, leave the exemption box off and read the Medicare levy line. Do not add the levy to PAYG tax already withheld.

How it changes the refund estimate

The levy adds to the assessment before withholding is reconciled. If payroll withholding did not fully cover the combined income tax and levy, an expected refund may shrink. Use the breakdown rather than focusing only on the headline result.

The calculator's refund or amount owing is PAYG withholding entered minus its included income tax, ordinary Medicare levy and any selected HELP repayment. It is not an ATO assessment and excludes the surcharge and other return adjustments listed above.