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Medicare v Medicare Surcharge | Gotax

May 26, 2024

Find out about the difference between Medicare and the Medicare Surcharge for 2024

First up is the Medicare Levy

Medicare Levy is designed to raise the required funds to help support the funding of the Hospital System.  It does that through the Taxation system and each pay period you are happily donating 2% of your gross wages.

This ensures that the population has timely and full access to proper health care.  Whether that actually happens is a whole different story.

Without allowing for the various concessions and income thresholds, the amount of the Medicare levy is a flat rate of 2%.  So, if you are earning $50,000 for the year, your contribution will be $1000 (being 2% of $50,000).

Medicare Levy and surchargeNext is the Medicare Surcharge

The Medicare Surcharge is an additional levy charged on high-income earners who DO NOT have private hospital cover.

This surcharge is designed to encourage individuals to take up private health insurance and reduce the burden on the public healthcare system.

Individuals who earn above a certain threshold and do not have private hospital cover may be required to pay the Medicare Surcharge, which is calculated based on their income level.

The Medicare levy and surcharge thresholds are important for you to understand.

Here are the Medicare rates:

Medicare Levy Thresholds for 2024:


Individual Threshold: The Medicare levy is generally 2% of your taxable income. For the 2024 income year, the threshold below which no Medicare levy is payable is $23,365 for singles.
Family Threshold: For families, the threshold is $39,402, plus $3,760 for each dependent child or student.

Medicare Levy Surcharge (Surcharge) Limits for 2024:


The Medicare Levy Surcharge is an additional tax for individuals and families who do not have private hospital cover and whose income exceeds certain thresholds. The Surcharge rates and thresholds for 2024 are as follows:

Singles:
   - Income up to $93,000: 0%
   - Income $93,001 - $108,000: 1%
   - Income $108,001 - $144,000: 1.25%
   - Income $144,001 and above: 1.5%

Families:
   - Income up to $186,000: 0%
   - Income $186,001 - $216,000: 1%
   - Income $216,001 - $288,000: 1.25%
   - Income $288,001 and above: 1.5%

These thresholds are adjusted for each dependent child after the first, increasing the family threshold by $1,500 per child.

These figures are critical for tax planning, especially if considering the impact of the Medicare levy and surcharge on your overall tax liability.

Try our Gotax TaxAi for all those tax questions www.gotax.com.au

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