Understanding the 2024–25 Medicare Levy and Surcharge: How to Maximize Your Benefits
- Jun 14
- 3 min read
Navigating Australia's tax system can feel overwhelming, especially when it comes to understanding the Medicare Levy and the Medicare Levy Surcharge (MLS). These two charges play a significant role in how much tax you pay—and they can also affect your access to healthcare services.
In this article, we’ll break down the Medicare Levy and MLS for the 2024–25 financial year, explain who is exempt, and provide actionable strategies to reduce your liability and enhance your healthcare coverage.
📺 Watch this short explainer video to clearly understand how the 2024–25 Medicare Levy and Surcharge (MLS) apply based on your income and health insurance. It’s a quick and visual way to get on top of your tax obligations in Australia.
What Is the Medicare Levy?
The Medicare Levy is a mandatory tax that helps fund Australia’s public healthcare system. For the 2024–25 financial year, the standard Medicare Levy remains at 2% of your taxable income.
This levy is automatically deducted during tax assessment and applies to most Australian residents. It ensures shared financial responsibility for universal healthcare access.
2024–25 Medicare Levy Exemptions & Reductions
If you fall below certain income thresholds, you may be eligible for a reduction or full exemption:
Singles: Full exemption if taxable income is $26,000 or less
Families: Combined income threshold for exemption is $43,846, plus an additional amount for each dependent child
Seniors and pensioners may also qualify for special rates depending on their income.
What Is the Medicare Levy Surcharge (MLS)?
The MLS is an additional tax (1%–1.5%) for higher-income earners who do not hold appropriate private hospital insurance. It aims to reduce demand on the public system by encouraging private cover.
2024–25 MLS Income Thresholds
Income Tier (Singles) | MLS Rate | Income Tier (Families) | MLS Rate |
$97,000 or less | 0% | $194,000 or less | 0% |
$97,001–$113,000 | 1% | $194,001–$226,000 | 1% |
$113,001–$151,000 | 1.25% | $226,001–$302,000 | 1.25% |
$151,001 and above | 1.5% | $302,001 and above | 1.5% |
Note: These thresholds are indexed annually and increase with the number of dependent children.
Who Is Exempt?
You may be exempt from the levy or surcharge if:
Your income is below the threshold
You're not entitled to Medicare (e.g., non-residents)
You serve in the Australian Defence Force
You hold private health insurance that meets the government's minimum requirements
Always review your eligibility annually to avoid overpaying.
Strategies to Minimize Your Medicare Levy and Surcharge
Here are proven strategies for reducing or eliminating these charges:
✅ Take Out Private Health Insurance
Ensure your policy includes eligible private hospital cover to avoid the surcharge. It often costs less than the MLS you’d otherwise pay.
✅ Manage Your Taxable Income
Use deductions and super contributions to stay below income thresholds. Speak with a tax advisor to optimise this approach.
Common Misconceptions
“They’re the same tax.” False. The Medicare Levy applies broadly; the MLS only affects higher-income earners without private cover.
“Any health insurance counts.” Not true. Only qualifying hospital policies exempt you from the MLS.
“Everyone pays full rates.” Many are eligible for reductions or exemptions but fail to claim them.
Final Thoughts: How to Maximize Your Benefits
Understanding how the Medicare Levy and Surcharge work—especially with the 2024–25 updates—is key to protecting both your finances and your health.
Here’s what you can do:
✅ Review your income level and tax bracket
✅ Check your eligibility for exemptions or reductions
✅ Take out private health insurance if you're above the MLS threshold
✅ Consult a tax professional for tailored advice
Need expert help? 📞Contact Baron Tax & Accounting today at 1300 087 213 or email us at info@baronaccounting.com for personalized tax planning and health cover advice.
💬 Online chat available: LINE: Barontax / WhatsApp: 0490 925 969
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