Medicare levy reduction – family income

Eligibility for Medicare levy reduction – family taxable income

You may be eligible for a Medicare levy reduction based on your family taxable income if you meet both of the following:

1. Your individual taxable income was more than $32,500 ($51,361 for seniors and pensioners entitled to the seniors and pensioners tax offset (SAPTO)) in 2023–24.
2. You either
   • had a spouse (married or de facto)
   • had a spouse that died during the year, and you did not have another spouse before the end of the year
   • are entitled to an invalid or invalid carer tax offset in respect of your child
   • had sole care of one or more dependent children.

If you have a spouse, you may not get SAPTO even if you meet all the eligibility conditions. This is because the amount of the tax offset is based on your individual rebate income, not your combined rebate income. Even if you are eligible for SAPTO but do not get the offset, it doesn't entitle you to a Medicare levy reduction.

You can use the Medicare levy calculator to work out your Medicare levy payable.

Family taxable income thresholds

Your Medicare levy is reduced if your family income is below a certain amount. In some cases, you may not have to pay this levy at all.

In 2023–24, you do not have to pay the Medicare levy if your family income is equal to or less than the family income threshold.

Any Medicare levy you have to pay will be reduced if your family income is above the lower family income threshold and at or below an upper threshold. We work out any reduction for you when you lodge your tax return.

The lower family income threshold is:

• $43,846, or
• $57,198 if you are entitled to the seniors and pensioners tax offset.

The lower family income threshold increases by $4,027 for each dependent child.

The upper family income threshold is:

• $54,807, or
• $71,497 if you are entitled to the seniors and pensioners tax offset (if your entitlement to the seniors and pensioners tax offset reduces to zero before you reach the upper limit you must use the threshold of $54,807).

The upper income threshold increases by $5,034 for each dependent child.

Calculate your family taxable income

Family taxable income is either:

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

If you received a superannuation lump sum payment when you reached your preservation age and were under 60 years old, the amount of the taxed element (not including the amount of any death benefit) that does not exceed your low-rate cap for the year is not included in your taxable income for Medicare levy purposes.

Your low-rate cap is the cap amount that applies to that year less any superannuation lump sums you received in previous years.

Dependent children for Medicare levy reduction purposes

For Medicare levy reduction purposes, a dependent child is any child:

• you maintained who was an Australian resident, and
• whose adjusted taxable income was less than the amounts in the table below.

Dependent children – Adjusted taxable income (ATI) thresholds

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 maintained who was not a full-time student	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	For the first child: $1,786 For each additional child: $1,410
Any full-time student aged under 25 years old at a school, college or university	$282 plus $28.92 for each week you maintained them	$1,786

Sole care definition

Sole care means you alone had full responsibility for the upbringing, welfare and maintenance of a child or student.

You aren't considered to have sole care if you are living with a spouse (married or de facto) unless there are special circumstances. For example, if a spouse is medically incapable of assisting you with the care.