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. For 2025-26, singles earning below $26,000 are exempt, and the levy phases in between $26,000 and $32,500.

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 2025-26: income $93,001-$108,000 pays 1.0%, $108,001-$144,000 pays 1.25%, and above $144,001 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 $26,000?

No. For 2025-26, if your taxable income is $26,000 or less (single, no dependents), you are fully exempt from the Medicare levy. Between $26,000 and $32,500, you pay a reduced levy that phases in gradually. Above $32,500 you pay the full 2% levy. Family thresholds are higher: $43,846 plus $4,027 per dependent child.

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 2025-26. See if you qualify for a reduction, and whether private health insurance would save you money.

Last verified: 1 July 2025

Tax Return Checklist 2026: Everything You Need Before You Lodge

A complete tax return checklist for the 2025-26 year — income sources, deductions, offsets, and documents you need to have ready before lodging with myTax or your tax agent.

Top Tax Deductions for Australians in 2025-26: The Complete Guide

A comprehensive guide to every major tax deduction available to Australian employees, investors, and sole traders — from work expenses to investment interest and charitable donations.

Health Insurance Premium Increase April 2026: How Much More Will You Pay?

Private health insurance premiums increased by an average of 3.73% from 1 April 2026. Find out how much more you'll pay, which funds increased the most, and what you can do about it.

General information and estimates only — not financial, tax, or legal advice. Always verify with Services Australia.

Learn more

Medicare Levy Surcharge Explained: Who Pays It and How to Avoid It

The Medicare Levy Surcharge adds 1-1.5% to your tax bill if you earn over $93,000 and don't have hospital cover. Here's how it works, who pays it, and whether private health insurance is worth it.

Medicare Levy Calculator

Related Articles

Learn more

Related Tools