How much is the Medicare levy in Australia?

The Medicare levy is 2% of your taxable income for Australian residents. If your taxable income is $26,000 or less, you are fully exempt. Between $26,001 and $32,500, you pay a reduced levy calculated as 10% of the amount over $26,000. Non-residents do not pay the Medicare levy.

What is the Medicare Levy Surcharge (MLS)?

The Medicare Levy Surcharge is an additional charge of 1% to 1.5% on top of the standard 2% Medicare levy. It applies to singles earning above $93,000 (or families above $186,000) who do not have private hospital cover. Tier 1 is 1.0% ($93,001-$108,000), Tier 2 is 1.25% ($108,001-$144,000), and Tier 3 is 1.5% ($144,001+).

Is it cheaper to get private health insurance or pay the MLS?

For most people earning above $93,000, getting basic private hospital cover is cheaper than paying the MLS. For example, on a $120,000 income, the MLS at Tier 2 (1.25%) costs $1,500/year, while a basic hospital policy with the government rebate typically costs $1,200-$1,800/year. You also get the benefit of private hospital access.

What is the family Medicare levy threshold?

The family Medicare levy threshold for FY 2025-26 is $41,089, plus $3,760 for each dependent child. If combined family income is below this threshold, no Medicare levy is payable. Between the threshold and 125% of the threshold, a reduced levy applies at 10% of the excess.

What income is used to calculate the MLS?

MLS income is broader than taxable income. It includes your taxable income plus reportable fringe benefits, net investment losses (including negative gearing), and reportable super contributions. This means salary sacrificing into super does not help you avoid the MLS threshold.

Medicare Levy Calculator Australia — FY 2025-26

Calculate your Medicare levy (2%), Medicare Levy Surcharge, and whether private health insurance saves you money. Includes family thresholds, MLS tiers, and PHI rebate rates. Updated for FY 2025-26.

Calculate your Medicare levy and surcharge

Taxable income

Your total taxable income for the financial year

Status

Single or family for Medicare levy thresholds

I have private hospital coverAvoids Medicare Levy Surcharge if income > $93,000

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How to Use This Calculator

Levy Calculation tab

Enter your taxable income, select single or family status, the number of dependent children (if family), and whether you have private hospital cover. The calculator shows your Medicare levy (2% or reduced/exempt), MLS amount and tier, total Medicare cost, and effective Medicare rate.

MLS vs Private Health tab

Enter your income, age bracket, and single/family status. The calculator compares your annual MLS cost against an estimated basic hospital premium (with government rebate) and tells you which option is cheaper.

Family Calculator tab

Enter your combined family income, number of dependent children, and whether both partners have private hospital cover. See the family Medicare levy, family MLS threshold, MLS amount, and per-person equivalent cost.

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The Formula

Medicare Levy (Residents):
Income ≤ $26,000: $0 (exempt)
$26,001 – $32,500: 10% of amount over $26,000 (phase-in)
Above $32,500: 2% of taxable income

Family Threshold:
$41,089 + $3,760 per dependent child
Phase-in: 10% of income exceeding the threshold

Medicare Levy Surcharge (no private hospital cover):
Tier 1: 1.0% ($93,001 – $108,000 single / $186,001 – $216,000 family)
Tier 2: 1.25% ($108,001 – $144,000 single / $216,001 – $288,000 family)
Tier 3: 1.5% ($144,001+ single / $288,001+ family)

Total Medicare Cost:
Total = Medicare Levy + Medicare Levy Surcharge (if applicable)

Worked Example

Single, $120,000 income, no private health insurance

Step 1: Medicare levy

Income above $32,500Full 2% rate applies

Medicare levy$120,000 × 2% = $2,400

Step 2: Medicare Levy Surcharge

Income $120,000 (single, no PHI)MLS Tier 2 applies

MLS rate1.25%

MLS amount$120,000 × 1.25% = $1,500

Step 3: Total and comparison

Total Medicare cost$2,400 + $1,500 = $3,900

Effective Medicare rate3.25%

Basic hospital policy (with rebate)~$1,200 – $1,800/year

Saving from getting PHI~$300 – $700/year

Verdict: On $120,000 with no private health, you pay $3,900 in total Medicare costs. A basic hospital policy costs approximately $1,200–$1,800 per year after the government rebate, saving you $300–$700 compared to paying the MLS. Plus you get private hospital access.

Medicare Levy & Surcharge Rates (FY 2025-26)

Medicare levy thresholds

Category	Threshold	Rate
Single – exempt	≤ $26,000	0%
Single – phase-in	$26,001 – $32,500	10% of excess
Single – full rate	Above $32,500	2%
Family – base threshold	$41,089	+ $3,760/child

Non-residents do not pay the Medicare levy.

Medicare Levy Surcharge (MLS) tiers

Tier	Single	Family	Rate
Base (no MLS)	≤ $93,000	≤ $186,000	0%
Tier 1	$93,001 – $108,000	$186,001 – $216,000	1.0%
Tier 2	$108,001 – $144,000	$216,001 – $288,000	1.25%
Tier 3	$144,001+	$288,001+	1.5%

MLS only applies if you do NOT have private hospital cover. MLS income = taxable income + fringe benefits + net investment losses + reportable super contributions.

PHI rebate tiers by age and income

Age	Base (≤$93K)	Tier 1	Tier 2	Tier 3
Under 65	24.608%	16.405%	8.202%	0%
65–69	28.710%	20.507%	12.304%	0%
70+	32.813%	24.610%	16.407%	0%

Rebate is applied to reduce your private health insurance premium. Higher age brackets receive a larger rebate. FY 2025-26 rates.

FAQ

Who is exempt from the Medicare levy? ▼

You may be exempt from the Medicare levy if: your taxable income is $26,000 or less (single), you are a non-resident for tax purposes, you have a Medicare entitlement statement confirming you were not entitled to Medicare benefits for all or part of the year, or you are in a prescribed category (e.g., serving members of foreign armed forces). Reduced rates apply between $26,001 and $32,500.

Can I avoid the MLS by salary sacrificing into super? ▼

No. The MLS is calculated on MLS income, which includes taxable income plus reportable fringe benefits, net investment losses, and reportable super contributions. Salary sacrificing into super counts as a reportable super contribution and is added back to your MLS income. The only way to avoid the MLS is to get private hospital cover or earn below the threshold.

Does my partner's income affect my MLS? ▼

Yes, if you are in a couple or family. Family MLS thresholds are double the single thresholds (e.g., $186,000 instead of $93,000). However, both partners must hold private hospital cover to avoid the MLS. If only one partner has PHI, the MLS still applies. Family thresholds increase by $1,500 for each dependent child after the first.

What private health cover do I need to avoid the MLS? ▼

You need private hospital cover (not just extras cover) with an Australian registered health insurer. The policy must cover hospital treatment. You can choose any excess level (e.g., $500 or $750 excess to reduce premiums). Basic hospital policies that meet this requirement typically cost $1,200–$1,800 per year for singles after the government rebate.

When is the Medicare levy assessed? ▼

The Medicare levy is assessed when you lodge your annual tax return. It is calculated on your total taxable income for the financial year (1 July to 30 June). Your employer does not withhold the Medicare levy separately — it is included in the PAYG withholding amount taken from each pay. If you owe additional Medicare levy or MLS, the ATO will include it in your tax assessment.

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