Millions of Aussies can now avoid or pay a lower Medicare tax payment, as the Australian government announced under a new law passed in parliament.
Under the new law passed by the parliament, the government plans to increase the threshold from 2% to 7.1% for the Medicare tax that applies to all taxpayers, singles, families, seniors, and pensioners on low incomes, in line with inflation.
Thus, under the new law, singles earning up to $26,000 do not have to pay for Medicare, as against the previous threshold of $24,276.
According to Treasurer Jim Chalmers, the adjustments are just one aspect of larger tax breaks for Australians with “modest incomes” that help with living expenses.
“It will ensure people on lower incomes continue to pay less or are exempt from the Medicare levy,” Chalmers continued. “It means 1.2 million Australians get to keep a bit more of what they earn.”
What is the Medicare levy?
Two percent of your taxable income goes toward the Medicare levy. In addition to paying taxes on your taxable income, you also pay the levy.
A person earning the median annual paycheck of $67,600, for instance, would be required to pay $1,352 in Medicare levy.
Part of the expenditures associated with Australia’s public health system are covered by the Medicare levy.
Who is exempt from paying the Medicare levy?
Some taxpayers may qualify for a Medicare levy exemption or receive a reduction in the amount owed.
As of right now, single individuals making less than $24,276 are exempt from paying the charge. After that, the levy progressively rises, and anyone making more than $30,345 must pay the entire amount due.
Additionally, there are exceptions for those who fit specific qualifications, such as being a temporary foreign resident working in Australia, not being eligible for Medicare, or having specific medical needs.
What is changing?
In accordance with inflation, the government will raise the Medicare low-income criteria by 7.1% for seniors, families, single people, and pension holders.
Due to the increase, those who earn up to $26,000 in taxable income will not be subject to the Medicare levy. Anyone making $32,500 or more will be required to pay the entire 2 percent charge.
Before the levy takes effect, seniors and pensioners will be allowed to make up to $41,089 each year. At $51,361, earnings will be subject to the full 2 percent levy.
Families will be able to make up to $43,486 every year, with $54,807 being the total amount due. Higher thresholds will apply to families with more children and to those who qualify for senior and pensioner tax relief.
How much better off will I be?
According to the changes, an individual making $30,000 is expected to receive an additional $172.40 in tax savings for the year. Families will save up to $344.10, while single retirees will benefit by up to $272.40.
Due to the adjustments, 1.2 million low-income people will either continue to be exempt from the levy or see a reduction in their tax burden.
- Published By Team Australia News