The Medicare levy explained
Someone on $32,000 might expect a Medicare levy of $640, which is 2% of their income. The real figure on their return is $398.90. The gap is the shade in zone, and it catches anyone whose taxable income lands between $28,011 and $35,013.
Above $35,013 it is a flat 2%
On $80,000 the levy is $1,600. It is charged on all of your taxable income from the first dollar, whatever your tax bracket, and it is separate from income tax. That is why our tables show them as two lines. On your payslip both sit inside the PAYG withholding figure.
Inside the shade in zone
Up to $28,011 of taxable income there is no levy. From $28,012 to $35,013 you pay 10% of each dollar over $28,011. At $35,013 that works out at $700.20, about the same as the full 2%, so the two methods meet there and the full levy applies above it.
| Taxable income | Levy you pay | Full 2% would be | Cost of the next dollar, tax and levy |
|---|---|---|---|
| $30,000 | $198.90 | $600 | 25% |
| $32,000 | $398.90 | $640 | 25% |
| $34,000 | $598.90 | $680 | 25% |
| $36,000 | $720 | $720 | 17% |
The zone is only $7,002 wide, so the levy climbs quickly. Inside it, each extra dollar costs 10% in levy on top of 15% income tax. Once the full levy applies, the cost of the next dollar drops back.
A raise from $32,000 to $34,000
On $32,000 the full levy would be $640. But you pay 10% of the $3,989 above $28,011, which is $398.90. Income tax is $1,370 after the low income tax offset, so take home pay is $30,231.10 a year.
Now give that person a $2,000 raise. The levy rises by $200 and income tax by $300. They keep $1,500 of the $2,000. It is still a raise, just a smaller one than it looks.
What our figures assume
The thresholds here are for single people who do not qualify for the senior and pensioner offset. Families and seniors get different ones, and our calculators do not model them.
They are also the 2025 to 26 figures. The ATO had not published thresholds for 2026 to 27 when we last checked, and they usually go up each year. Incomes above $35,013 are not affected. In the shade in zone our figures may be slightly off, and we recheck every July.
Higher earners without private hospital cover can owe a separate charge, the Medicare levy surcharge. It is not in our figures. The ATO lists the current surcharge thresholds.
Try your own salary on the calculator or look at the $40,000 salary page. Income tax is covered in how Australian income tax works.
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