How much is the Medicare levy in Australia?

The Medicare levy is 2% of your taxable income for most Australian residents. It funds Australia's public healthcare system (Medicare). Low-income earners may qualify for a reduction or full exemption. On the ATO's most recently published thresholds, singles earning $28,011 or less are exempt, and the levy phases in between $28,011 and $35,013.

What is the Medicare levy surcharge (MLS)?

The Medicare levy surcharge is an additional tax of 1% to 1.5% on top of the standard 2% Medicare levy. It applies to higher-income earners who do not hold private hospital cover. For singles in 2026-27: income $105,001-$123,000 pays 1.0%, $123,001-$164,000 pays 1.25%, and above $164,001 pays 1.5%. Family thresholds are double these amounts plus $1,500 per dependent child after the first.

Can I avoid the Medicare levy surcharge?

Yes. You can avoid the Medicare levy surcharge by taking out private hospital cover (not just extras cover). If you earn above the MLS threshold, the surcharge can cost more than a basic hospital policy — so it's often cheaper to get private health insurance. Compare the annual surcharge amount against the cost of a basic hospital policy to decide.

Do I have to pay the Medicare levy if I earn under $28,011?

No. If your taxable income is $28,011 or less (single, no dependents), you are fully exempt from the Medicare levy. Between $28,011 and $35,013, you pay a reduced levy that phases in gradually. Above $35,013 you pay the full 2% levy. Family thresholds are higher: the lower threshold is $47,238 plus $4,338 per dependent child. These are the ATO's most recently published low-income thresholds — they are indexed in arrears, so the 2026-27 figures are not available yet.

Is the Medicare levy included in PAYG tax?

Yes. Your employer includes the Medicare levy in the PAYG tax withheld from your pay. It's not a separate deduction on your payslip — it's built into the standard tax withholding tables published by the ATO. The Medicare levy surcharge, however, may need to be separately accounted for if applicable.

Medicare Levy Calculator

Calculate your Medicare levy and surcharge for 2026-27. See if you qualify for a reduction, and whether private health insurance would save you money.

Last verified: 2 August 2026

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Medicare Levy Calculator

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