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Guides / Medicare Levy Surcharge Calculator 2026

Medicare Levy Surcharge Calculator 2025-26

Updated March 2026 · 10 min read

The Medicare Levy Surcharge (MLS) is a tax of 1% to 1.5% on top of the standard 2% Medicare Levy. It applies to Australian taxpayers who earn above a certain income threshold and do not hold an eligible private hospital insurance policy.

For many higher income earners, the annual MLS cost exceeds the cost of a basic hospital cover policy. Use the calculator below to estimate your MLS and see how it compares to hospital cover premiums.

MLS vs Hospital Cover Calculator

$50,000$400,000

2025-26 MLS Income Thresholds

The MLS rate depends on your income for MLS purposes and whether you are single or a family. The thresholds for the 2025-26 financial year are:

TierSinglesFamiliesMLS Rate
Base (no MLS)$97,000 or below$194,000 or below0%
Tier 1$97,001 - $113,000$194,001 - $226,0001.0%
Tier 2$113,001 - $151,000$226,001 - $302,0001.25%
Tier 3$151,001+$302,001+1.5%
Family threshold adjustment

For families, the income threshold increases by $1,500 for each dependent child after the first. For example, a family with 3 children has a base threshold of $194,000 + (2 x $1,500) = $197,000.

How to Avoid the MLS

To be exempt from the MLS, you must hold an eligible private hospital insurance policy with an excess (also called the front-end deductible) of no more than $750 for singles or $1,500 for couples and families. The policy must be held with a registered Australian health fund.

Extras-only cover does not qualify. The policy must include hospital treatment cover. You need to maintain cover for the full financial year, or you will be charged the MLS for the portion of the year you were not covered.

When Hospital Cover Costs Less Than the MLS

A basic hospital cover policy for a single adult can cost as little as $90 to $130 per month (after the government rebate). For someone earning $120,000 per year, the MLS at 1.25% would be $1,500 per year, or $125 per month. In this case, taking out a basic hospital policy and avoiding the MLS could result in a similar or lower annual cost, with the added benefit of private hospital access.

The higher your income, the larger the gap. At $200,000 income, the MLS at 1.5% is $3,000 per year ($250/month), well above the cost of a basic hospital policy.

Frequently Asked Questions

What income is used to calculate the Medicare Levy Surcharge?
The MLS uses your income for MLS purposes, which includes taxable income, reportable fringe benefits, total net investment losses (including negative gearing), and reportable super contributions. This is typically higher than your taxable income alone.
Does extras-only cover count for avoiding the MLS?
No. Only an eligible hospital cover policy with an excess of $750 or less for singles ($1,500 or less for families) satisfies the MLS exemption requirement. Extras-only cover does not qualify.
Do I need to hold hospital cover for the entire financial year?
You only need to pay the MLS for the days you do not have appropriate hospital cover. If you take out cover partway through the year, the surcharge is pro-rated for the days without cover.
What happens if I have a family but only one partner has hospital cover?
For MLS purposes, the income of both partners is combined regardless of whether you lodge individual or joint tax returns. Both partners must be covered by an eligible hospital policy to avoid the surcharge on the combined family income.
Is the Medicare Levy Surcharge the same as the Medicare Levy?
No. The Medicare Levy is a flat 2% of taxable income paid by most Australian taxpayers to help fund the public healthcare system. The Medicare Levy Surcharge is a separate charge of 1% to 1.5% that applies only to higher income earners who do not hold eligible hospital cover. They are calculated and applied independently.

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General information only. This is not financial or tax advice. MLS thresholds are for the 2025-26 financial year as published by the Australian Taxation Office. Actual MLS liability depends on your individual circumstances. Consult a qualified tax professional for personalised advice.