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Australia Healthcare Costs & Medical Expenses Tax Guide

Australian healthcare costs and medical expense tax rules. The guide covers: the Net Medical Expenses Tax Offset (the 'NMETO') abolished — the 'NMETO' (the 'Net Medical Expenses Tax Offset') was 'abolished from the 1 July 2019' — the 'medical expenses are NO LONGER eligible for the tax offset' for the 'general medical expenses'; the 'NMETO' was the '20% tax offset' on the 'net medical expenses above the $2,115 threshold' (the 'threshold for the 2023-24 year'); the 'NMETO' is 'phased out' — the 'taxpayers cannot claim the NMETO for the 'medical expenses incurred after the 30 June 2019''; the 'medical expenses that are NOT deductible' include: the 'GP visits', the 'specialist visits', the 'dental expenses', the 'optical expenses', the 'pharmaceutical expenses', the 'physiotherapy', the 'chiropractic', the 'alternative therapies'; the Private Health Insurance (the 'PHI') Rebate — the 'PHI rebate' is the 'government rebate' on the 'private health insurance premiums' — the 'rebate is based on the 'income' (the 'income test for the PHI rebate') and the 'age' (the 'age-based PHI rebate rates'); the 'PHI rebate rates for the 2025-26 year': (i) the 'income below $93,000 (the singles) / $186,000 (the families)' — the 'rebate of 25.4% for the under 65, 25.3% for the 65 to 69, 25.2% for the 70+', (ii) the 'income $93,001 to $108,000 (the singles) / $186,001 to $216,000 (the families)' — the 'rebate of 17.3% for the under 65, 17.3% for the 65 to 69, 17.2% for the 70+', (iii) the 'income $108,001 to $144,000 (the singles) / $216,001 to $288,000 (the families)' — the 'rebate of 9.9% for the under 65, 9.8% for the 65 to 69, 9.8% for the 70+', (iv) the 'income above $144,000 (the singles) / $288,000 (the families)' — the 'rebate of 0% (the 'no PHI rebate' for the 'higher-income earners'); the 'PHI rebate' is 'claimed as the 'premium reduction' (the 'reduced premium' from the 'health insurer') or the 'tax offset' in the 'annual tax return'; the Medicare Levy Surcharge (the 'MLS') — the 'MLS' is the 'additional 1% to 1.5% Medicare levy' for the 'individuals who do NOT have the 'appropriate private hospital cover' and the 'income above the MLS threshold'; the 'MLS thresholds for the 2025-26 year': (i) the 'MLS of 1% for the singles above $93,000 and the families above $186,000', (ii) the 'MLS of 1.25% for the singles above $108,000 and the families above $216,000', (iii) the 'MLS of 1.5% for the singles above $144,000 and the families above $288,000'; the medical expense deductions for the disability and the aged care — the 'medical expenses for the 'disability' or the 'aged care' may be 'deductible' if the 'expenses are incurred for the 'income-producing purpose'' (the 'expenses for the 'carer' or the 'support worker' that 'allow the individual to work'); the 'disability-related expenses' (the 'modifications to the home, the vehicle, and the equipment') may be 'deductible' if the 'expenses are 'necessary for the employment''.

PHI Rebate Rates (2025-26)

  • Under $93K/$186K: The '25.4% PHI rebate' for the 'under 65' — the 'rebate reduces the premium'.
  • $93K-$108K / $186K-$216K: The '17.3% PHI rebate' for the 'under 65'.
  • $108K-$144K / $216K-$288K: The '9.9% PHI rebate' for the 'under 65'.
  • Above $144K / $288K: The '0% PHI rebate' — the 'no rebate for the higher-income earners'.

For the Medicare levy surcharge and the personal tax rates, see our Personal Tax Guide →.

Medicare Levy Surcharge

  • 1% MLS: The 'singles above $93,000' and the 'families above $186,000'.
  • 1.25% MLS: The 'singles above $108,000' and the 'families above $216,000'.
  • 1.5% MLS: The 'singles above $144,000' and the 'families above $288,000'.

For the private health insurance and the health coverage options, see the Private Health Insurance Ombudsman website (www.privatehealth.gov.au).

NMETO & Disability Deductions

  • NMETO abolished: The 'medical expenses tax offset is NOT available' from the '1 July 2019'.
  • Disability expenses: The 'expenses for the 'carer' or the 'support worker' may be 'deductible' if the 'expenses allow the individual to work'.

For the aged care and the seniors tax offsets, see our Aged Care & Seniors Guide →.