Tax Deductions for Medical Expenses: What Can You Claim?

Ever stared at a stack of medical bills wondering if the ATO might cut you some slack come tax time? You're not alone—many Aussies grapple with healthcare costs, especially as they climb in 2026. While the old medical expenses tax offset is long gone, smart claiming around Medicare, private health insurance, and specific work-related health costs can still lighten your load.

We'll break down what's claimable today, from COVID tests to private health rebates, with practical tips tailored for Australian taxpayers. Whether you're managing chronic conditions, supporting family, or just navigating PBS scripts, this guide arms you with the latest 2026 info to maximise your return.

Has the Medical Expenses Tax Offset Disappeared for Good?

Short answer: yes, for most Aussies. The medical expenses tax offset ended after the 2018–19 income year—it's not available from 1 July 2019 onwards. This means no more rebates on net eligible expenses for disability aids, attendant care, or aged care in your current tax return.

Back then, you could claim after subtracting refunds from NDIS or private health insurers, but only if expenses exceeded income thresholds based on your adjusted taxable income (ATI) and family status. Keep old records if you're amending past returns, but for 2025–26 and beyond, look elsewhere for relief.

Why the Change and What It Means for You

The ATO shifted focus to broader supports like Medicare and private health incentives. If your medical bills don't qualify for work-related deductions or other offsets, they're generally not deductible. Always reduce claims by any reimbursements from government schemes—except certain compensation payments.

• Keep records: Receipts for prosthetics, wheelchairs, in-home care, or NDIS statements.
• Dependants count: Include spouse, kids, or others.

Pro tip: Use the ATO's income tests calculator for ATI if checking legacy claims.

Medicare Levy: The 2% Everyone Pays (Unless...)

Most of us chip in a 2% Medicare levy on taxable income to fund public healthcare. But exemptions and reductions apply in 2026, especially for low earners or families.

2025–26 Medicare Levy Thresholds

Thresholds rose from 1 July 2024—here's the breakdown:

Category	Exemption Threshold	Full Levy Threshold
Singles	$27,222	$34,027
Single seniors/pensioners	$43,020	$53,775
Families	$45,907 (+$4,216 per child)	$57,383 (+$5,270 per child)
Families (seniors/pensioners)	$59,886 (+$4,216 per child)	$74,857 (+$5,270 per child)

If you're between thresholds, the levy phases in at 10 cents per dollar over the low end. Lodge your return, and the ATO calculates it automatically.

Watch the Medicare Levy Surcharge (MLS)

No private hospital cover and income over base tiers? Add 1–1.5% MLS. Get cover to dodge it—ties into private health offsets below.

Private Health Insurance: Claim the Tax Offset

Private health premiums aren't deductible, but you can snag an income-tested tax offset for hospital cover—up to 32.385% in 2026.

2025–26 Private Health Offset Rates

No offset if ATI tops $158,000 (singles) or $316,000 (families). Rates from 1 July 2025:

Under 65:

• 24.288% if ATI ≤ $101,000 (singles) / $202,000 (families)
• 16.192% if $101,001–$118,000 / $202,001–$236,000
• 8.095% if $118,001–$158,000 / $236,001–$316,000

65–69: Higher base, up to 28.346%

70+: Up to 32.385% for low ATI

Claim via myTax or get rebates direct from insurers. Check eligibility on privatehealth.gov.au.

Work-Related Medical Expenses: What You Can Actually Deduct

General doctor visits? No dice. But COVID-19 tests (PCR or rapid antigen) bought for work purposes are deductible in 2026—no other medical expenses qualify broadly.

Other Health-Related Deductions

• Work-from-home health setup: If eligible under fixed rate method, include related costs—but substantiate.
• Upcoming $1,000 standard deduction (2026–27): Flat claim for work expenses, potentially covering minor health items if work-related. Choose it or itemise; affects returns from July 2027.
• ATO golden rules: Must be work-related, you paid it, not reimbursed.

Example: A nurse buying sanitiser for shifts? Deductible if records prove work use.

PBS Medicines: Cheaper in 2026, But Not Deductible

Great news—PBS scripts cap at $25 from 1 January 2026 (down from $31.60), saving $200 million yearly. Concession holders pay $7.70 till 2030. These out-of-pockets aren't tax-deductible, but lower costs mean more in your pocket.

Actionable tip: Get a PBS Safety Net card if filling 60+ scripts yearly for even bigger discounts.

Practical Tips to Maximise Your Health-Related Tax Savings

1. Track everything: Use the ATO app for receipts—crucial for work tests or offsets.
2. Family claims: Dependants boost thresholds; include them.
3. myTax audit: Pre-fill pulls Medicare/PBS data—review for accuracy.
4. Private health decision: Run ATO's offset calculator; might save more than premiums cost.
5. Seek advice: Complex cases? Chat with a tax agent via taxagentportal.ato.gov.au.

Disclaimer: Tax rules evolve—consult a registered tax agent or the ATO for personalised advice. This isn't financial advice.

Next Steps: Get Your Tax Return Right

Dig out your records, run ATO calculators for offsets and levies, and lodge early via myGov. For big medical years, bundle private health to hit offsets and skip MLS. Small tweaks now mean real savings—talk to a pro if unsure. Here's to healthier finances in 2026.