Medicare Levy and Surcharge Australia 2025–26: What Visa Holders Actually Pay
One of the most common tax questions among migrants and temporary visa holders in Australia is whether they pay the Medicare levy — and if so, how much. The short answer is: it depends entirely on your visa type and whether you have access to Medicare. This guide explains the 2025–26 Medicare levy rate, who is exempt, which visa holders qualify for the exemption, how the Medicare Levy Surcharge works, and how to claim the exemption correctly in your tax return.
Disclaimer: This article is general information only and does not constitute tax or financial advice. Tax obligations depend on individual circumstances. For advice specific to your situation, consult a registered tax agent or the Australian Taxation Office.
At a glance: 2025–26 Medicare levy
| Standard Medicare levy rate | 2% of taxable income |
| Low income threshold (singles) | $26,000 — no levy below this |
| Reduction threshold (singles) | $26,001–$32,500 — reduced levy applies |
| Permanent residents | Pay full 2% levy |
| Temporary visa holders (no Medicare access) | Exempt — can claim Medicare Levy Exemption Certificate |
| Temporary visa holders (with Medicare access) | Pay full 2% levy |
| Medicare Levy Surcharge | Additional 1%–1.5% for high earners without private hospital cover |
Source: ATO Medicare levy
What is the Medicare levy?
The Medicare levy is a 2% charge on your taxable income that helps fund Medicare — Australia’s public healthcare system covering bulk-billed GP visits, public hospital treatment and subsidised medicines through the Pharmaceutical Benefits Scheme (PBS).
For most Australian residents, the Medicare levy is automatic. Your employer deducts it from each pay cycle as part of the PAYG withholding system, alongside income tax. For full details on how income tax and the Medicare levy interact, see Australia tax rates 2025–26.
The Medicare levy is separate from income tax. It applies on top of your income tax bracket — it is not included in the ATO tax brackets.
Who pays the Medicare levy?
All Australian residents for tax purposes pay the Medicare levy unless they qualify for a reduction or exemption. Residency for tax purposes is separate from visa status — you can be a temporary visa holder and still be a tax resident. For a full explanation of how Australian tax residency is determined, see the Australian tax residency test 2026.
The key rule for visa holders is simple: if you cannot access Medicare, you do not pay the Medicare levy. The levy exists to fund a system you are entitled to use — if your visa excludes you from Medicare, you are exempt.
Which visa holders are exempt from the Medicare levy?
Visa holders NOT eligible for Medicare — fully exempt
These visa holders cannot access Medicare and are therefore exempt from the Medicare levy for the period they hold that visa:
- Subclass 482 Skills in Demand visa holders from countries without a Reciprocal Health Care Agreement with Australia — see the full SC 482 guide
- Subclass 500 Student visa holders from non-reciprocal countries
- Subclass 417 and 462 Working Holiday visa holders from non-reciprocal countries — taxed at the 15% WHM rate with no tax-free threshold and no Medicare levy
- Subclass 600 Visitor visa holders — see the SC 600 guide
- Other temporary visa holders from countries without a Reciprocal Health Care Agreement
To claim this exemption you need a Medicare Levy Exemption Certificate from Services Australia. The certificate confirms the period during which you were not entitled to Medicare benefits. You lodge this with your tax return each year.
Visa holders WHO CAN access Medicare — levy applies
These visa holders have Medicare access and therefore pay the full 2% levy:
- Australian permanent residents — full Medicare access, full 2% levy applies
- Subclass 820/801 onshore partner visa holders — Medicare access from lodgement. The Bridging Visa A issued at lodgement of the 820/801 confers Medicare eligibility immediately. The 2% levy applies from the date Medicare access begins
- Subclass 309/100 offshore partner visa holders — Medicare access from the 309 grant date, not from lodgement. See the SC 309/100 guide for details. The levy applies from the grant date
- New Zealand citizens on a Special Category Visa (SCV) — access Medicare, pay the levy
- Temporary visa holders from Reciprocal Health Care Agreement countries — see below
Reciprocal Health Care Agreements: which countries qualify?
Australia has Reciprocal Health Care Agreements (RHCAs) with eleven countries. Citizens of these countries who hold temporary visas may be eligible for Medicare for the duration of their stay, and therefore pay the Medicare levy:
| Country | Medicare access under RHCA |
|---|---|
| United Kingdom | Yes |
| Ireland | Yes |
| New Zealand | Yes |
| Netherlands | Yes |
| Sweden | Yes |
| Finland | Yes |
| Norway | Yes |
| Belgium | Yes |
| Slovenia | Yes |
| Malta | Yes |
| Italy | Yes |
The scope of coverage varies between agreements — some cover only immediately necessary treatment, while others provide broader access. Check your specific entitlements through Services Australia before assuming full Medicare access. If your RHCA provides only limited coverage, you may still be eligible for a partial Medicare levy exemption.
Low income thresholds: when you pay nothing or a reduced amount
Even if you are a tax resident required to pay the Medicare levy, low income earners pay a reduced amount or nothing at all.
| Situation | Income threshold (2025–26) |
|---|---|
| No Medicare levy payable | Taxable income at or below $26,000 (approx) |
| Reduced Medicare levy | Taxable income between $26,001–$32,500 (approx) |
| Full 2% levy | Taxable income above $32,500 |
| Seniors and pensioners — no levy | Different (higher) thresholds apply — check ATO |
Source: ATO Medicare levy
The ATO calculates any reduction automatically when you lodge your tax return — you do not need to manually calculate it. For families, thresholds are higher and based on combined family taxable income.
The Medicare Levy Surcharge: the extra charge for high earners without private hospital cover
The Medicare Levy Surcharge (MLS) is a separate and additional charge on top of the standard 2% Medicare levy. It applies to Australian residents who:
- Earn above the income threshold, AND
- Do not hold an appropriate level of private patient hospital cover from an Australian-registered health fund
The MLS is designed to encourage higher-income earners to take out private hospital cover, reducing pressure on the public system.
MLS income thresholds and rates for 2025–26
| Income tier | Singles | Families | MLS rate |
|---|---|---|---|
| Tier 0 | $93,000 or below | $186,000 or below | 0% — no surcharge |
| Tier 1 | $93,001–$108,000 | $186,001–$216,000 | 1.0% |
| Tier 2 | $108,001–$144,000 | $216,001–$288,000 | 1.25% |
| Tier 3 | $144,001 and above | $288,001 and above | 1.5% |
Source: ATO Medicare Levy Surcharge | privatehealth.gov.au
Note: Family income thresholds increase by $1,500 for each dependent child after the first.
MLS for visa holders
The MLS applies only to visa holders who are Australian tax residents and have Medicare access. If you are exempt from the Medicare levy because you cannot access Medicare, you are also exempt from the MLS.
For visa holders who do have Medicare access — such as 820/801 partner visa holders or permanent residents — the MLS applies on the same basis as any other Australian resident. If your income exceeds $93,000 and you do not hold appropriate private hospital cover, the MLS applies on top of the 2% levy.
Taking out private patient hospital cover from an Australian-registered health fund eliminates the MLS entirely, regardless of income level. For higher-income earners the cost of private hospital cover is often less than the MLS liability — but whether that calculation makes sense in your circumstances is a decision for you and a licensed adviser.
How to claim the Medicare levy exemption
If you are a temporary visa holder not entitled to Medicare, you must apply for a Medicare Levy Exemption Certificate from Services Australia to claim the exemption in your tax return. Without the certificate, your employer will withhold the Medicare levy from your pay and the ATO will apply it to your tax assessment by default.
Steps to claim
- Apply for a Medicare Levy Exemption Certificate through Services Australia. You can apply in person at a Services Australia service centre or by post.
- Provide your visa details, passport and evidence of your visa conditions confirming you are not entitled to Medicare.
- Services Australia issues a certificate stating the period during which you were not entitled to Medicare benefits.
- When lodging your tax return through myTax or through a registered tax agent, declare your Medicare levy exemption in the Medicare levy section of the return. Select the relevant exemption category and enter the number of days covered by the certificate.
- If your employer withheld the Medicare levy throughout the year but you are entitled to an exemption, the ATO refunds the excess as part of your overall tax refund when the return is assessed.
It is worth applying for the exemption certificate early in the financial year and providing it to your employer — this stops the withholding at source and avoids waiting for a refund at tax time.
Part-year exemptions: when your visa status changes mid-year
Many migrants experience a change in visa status during a financial year — for example, transitioning from a Subclass 482 to an 820/801 partner visa, or from an 820 to a permanent 801. In these cases the Medicare levy applies only from the date Medicare access begins.
The exemption certificate from Services Australia will specify the exact period during which you were not entitled to Medicare. The levy is then calculated only on income earned during the period of Medicare access. The ATO processes this automatically when you lodge your return, provided the certificate details are entered correctly.
Worked examples
Example 1 — SC 482 holder, non-reciprocal country: Rahul is on a Skills in Demand visa (SC 482) from India, earning $90,000. India does not have a Reciprocal Health Care Agreement with Australia. Rahul is not entitled to Medicare. He obtains a Medicare Levy Exemption Certificate from Services Australia. He pays $0 in Medicare levy and $0 in Medicare Levy Surcharge. His employer stops withholding the levy once provided with the certificate.
Example 2 — SC 820/801 partner visa holder from the UK: Sophie is from the UK and holds an 820/801 partner visa. The UK has a Reciprocal Health Care Agreement with Australia. Sophie is entitled to Medicare from the date of lodgement. She earns $65,000. She pays the full 2% Medicare levy ($1,300). Her income is below the MLS threshold so no surcharge applies.
Example 3 — Permanent resident, high income: Mei became a permanent resident in January 2025. She earns $110,000 and does not hold private hospital cover. She pays the 2% Medicare levy ($2,200) plus the Tier 2 Medicare Levy Surcharge at 1.25% on her income for MLS purposes ($1,375). Total Medicare-related charges: $3,575. Taking out hospital cover would eliminate the $1,375 surcharge.
Example 4 — Mid-year visa change: Carlos held an SC 482 from Brazil (non-reciprocal country) until 1 January 2026 when he was granted a permanent SC 186 visa. His Medicare access began on 1 January 2026. His exemption certificate covers 1 July 2025 to 31 December 2025 — 184 days. The ATO calculates the levy only on income attributable to the period from 1 January 2026 onward.
Frequently asked questions
Does my employer automatically stop withholding the Medicare levy if I am exempt?
No. Your employer withholds the Medicare levy by default unless you provide a Medicare Levy Exemption Certificate or a withholding variation. Without the certificate, your employer will continue withholding, and you will need to claim the refund through your tax return.
Can I claim the exemption if I have private health insurance in my home country?
No. The exemption is based on whether you have access to Medicare in Australia — not whether you have health insurance elsewhere. Overseas health insurance does not affect your Medicare levy status.
I am a student on an SC 500 visa from the UK. Do I pay the levy?
It depends on the scope of the RHCA. The UK RHCA provides Medicare access, so UK citizens on student visas are generally entitled to Medicare and therefore subject to the levy. However, the scope of coverage under the UK RHCA is more limited than full resident Medicare access. Verify your specific entitlements through Services Australia.
I was on a working holiday visa (417). Do I pay the Medicare levy?
Working holiday makers from non-reciprocal countries do not have Medicare access and are exempt from the levy. Working holiday makers are taxed at the WHM flat rate of 15% on all Australian income up to $45,000 — the Medicare levy does not apply on top.
Does the Medicare levy reduce my taxable income?
No. The Medicare levy is not a deductible expense. It is calculated on your taxable income and paid on top of income tax — it does not reduce the income figure on which tax is calculated.
This article is general information only and does not constitute tax or financial advice. Medicare levy obligations depend on individual circumstances including visa type, tax residency status and income. Consult a registered tax agent or visit the ATO for guidance specific to your situation.
Sources: ATO Medicare levy | ATO Medicare Levy Surcharge | Services Australia — Medicare | Services Australia — Reciprocal Health Care Agreements
