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Big Medicare changes coming for millions of Australians - here’s how much you could save

Millions of Australians will be able to pay a lower Medicare levy, or avoid the fee altogether, following changes by the Albanese government announced alongside stage three tax cuts on Thursday.

The low-income threshold, for which a two per cent Medicare levy applies, will increase by 7.1 per cent in line with inflation.

That’s a saving of up to $172 per year for single Australians who now fall below the new threshold, according to the ABC.

Watch the latest news and stream for free on 7plus >>

Australia’s Medicare levy is separate from tax and is paid to support the nation’s healthcare system. The levy is totally waived for the lowest income earners, is gradually phased in for the next income bracket, and applied to reflect two per cent of the earner’s income for those who earn above a certain bracket.

Change coming to Medicare cards within weeks

An extra $900 a year: How the new tax cut changes will impact you

Here’s how it works, and exactly what will change under the proposed stage three tax cuts

Single Australians who earn below $24,276 are currently exempt from paying a Medicare levy altogether, but under the proposed changes, that threshold will be increased to $26,000.

The levy is then currently phased in for Australians who earn above $24,276 but below $30,345, when the full two per cent levy applies. But under the new changes, the $30,345 threshold will be raised to $32,500. That means those earning $30,345 or less will see a levy reduction — for example, someone who earns $30,000 would save $172.

The thresholds will also be increasing by 7.1 per cent for single seniors and pensioners, as well as for families. It’s increasing from $47,956 to $51,361 for single seniors and pensioners, and from $51,173 to $54,807 for families. That means the changes will give seniors a saving of up to $272.40, and for families with two children an extra $344.10 in the pocket is possible.

“This means 1.2 million low-income earners will either remain exempt from paying the levy, or pay less in tax,” Albanese said in a statement on Wednesday.

The increase to the Medicare levy low-income thresholds is expected to cost the government $640 million over four years from 2023-24.

The Australians tipped to benefit from tax cut changes

What exactly happens in the first 24 hours after you win Powerball’s $150m

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