The Medicare Levy is a separate 2% charge on your taxable income, in addition to regular income tax, that helps fund Australia's public health system. Most taxpayers pay the full 2%, but a reduction or full exemption is available for lower-income earners, and a Medicare Levy Surcharge applies on top for some higher earners without private hospital cover.
| Status | No levy below | Full 2% levy above |
|---|---|---|
| Single | $26,000 | $32,500 |
| Family | $43,846 | $54,807 |
Between the two thresholds, a reduced levy applies on a sliding scale rather than the full 2%.
The MLS is a separate, additional charge — not a replacement for the standard levy — for higher earners who don't hold private hospital insurance. It ranges from 1% to 1.5% depending on income tier, applying on top of the standard 2% levy.
| Income tier (single) | MLS rate |
|---|---|
| Up to $97,000 | 0% |
| $97,001 – $113,000 | 1.0% |
| $113,001 – $151,000 | 1.25% |
| Over $151,000 | 1.5% |
Family thresholds are roughly double the single thresholds, adjusted upward for each dependent child after the first.
Medicare Levy: $80,000 × 2% = $1,600. Since $80,000 is below the $97,000 MLS threshold for singles, no surcharge applies. Total Medicare-related charges: $1,600.
Taking out an eligible private hospital insurance policy — not just extras cover — exempts you from the Medicare Levy Surcharge regardless of your income. For many people near or above the surcharge threshold, the cost of a basic hospital policy can be lower than the surcharge itself, making it worth comparing directly.