The Medicare Levy Surcharge (MLS) is an additional charge of 1-1.5% for high income earners who don't have private hospital cover. Having appropriate private health insurance can exempt you from the MLS.
Income for MLS purposes includes your taxable income plus certain other amounts. These additions help determine your MLS tier.
Medicare Levy Calculator 2025 – Australian Healthcare Tax Guide Updated Feb 2026
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Calculate Your Medicare Levy
See exactly how much Medicare levy you will pay based on your income. Includes levy reductions and surcharge calculations.
Use Calculator NowThe Medicare Levy is an Australian tax that funds the public health system, allowing eligible residents to access essential medical care at no or low cost. Most Australian taxpayers pay this 2% levy on their taxable income. Our free Medicare Levy calculator helps you understand exactly how much you will contribute based on your income level, family status, and eligibility for reductions or exemptions.
Understanding your Medicare Levy obligations helps with accurate tax planning and budgeting. Whether you are an employee checking your payslip accuracy or a taxpayer preparing your return, this calculator provides clarity on your healthcare contribution to Australia's Medicare system.
What Is the Medicare Levy?
The Medicare Levy is a compulsory tax paid by most Australian taxpayers to fund Australia's public health insurance system, Medicare. Established in 1984, Medicare provides eligible Australian residents with access to public hospitals as public patients, subsidized medical services through the Medicare Benefits Schedule (MBS), subsidized prescription medicines through the PBS, and a wide range of medical services and treatments.
Key Takeaways
- Standard Rate: 2% of taxable income for most taxpayers
- Levy Threshold: Reduced levy for incomes between $24,276-$30,345 (singles, 2024-25)
- Full Exemption: No levy payable for incomes below $24,276
- Family Threshold: Higher thresholds for families with dependent children
- Additional Surcharge: 1-1.5% extra for high-income earners without private hospital cover
How Does the Medicare Levy Work?
The Medicare Levy operates on your taxable income and is collected through the tax system. The standard levy calculation is your taxable income multiplied by 2%. For example, if your taxable income is $80,000, your Medicare Levy would be $1,600 per year, approximately $133 per month or $31 per week.
For employees, the Medicare Levy is typically deducted from your salary through the PAYG withholding system, appearing on your payslip. For self-employed individuals and others, it is calculated when lodging your annual tax return.
How to Use Our Medicare Levy Calculator
Our calculator provides accurate estimates of your Medicare Levy obligations. Simply enter your taxable income, select the tax year, specify your status as single or family, add family details if applicable, check your private health insurance status, and calculate to see your Medicare Levy and any reductions or surcharge.
Example: Single Person
Scenario: James earns $75,000 per year as a single Australian resident with no private health insurance.
- Taxable income: $75,000
- Standard Medicare Levy (2%): $1,500
- Income below MLS threshold ($97,000): No surcharge applies
- Total Medicare contribution: $1,500/year
James will pay approximately $125 per month toward Medicare through his tax.
Current Medicare Levy Rates & Thresholds (2024-25)
Singles Thresholds
| Taxable Income | Medicare Levy |
|---|---|
| Below $24,276 | 0% (fully exempt) |
| $24,276 - $30,345 | Reduced rate (10% of income over $24,276) |
| Above $30,345 | 2% of full taxable income |
Family Thresholds
For families, the thresholds are higher. The base family threshold is $40,939 combined income, with an additional $3,760 per dependent child. For a family with 2 children, the threshold would be $48,459 ($40,939 + $7,520).
Medicare Levy Reductions for Low Income Earners
If your income falls between the exemption threshold and the full levy threshold, you pay a reduced Medicare Levy. The reduced levy is calculated as 10% of your taxable income over the exemption threshold. For example, with an income of $27,000, you would pay $272.40 instead of the full $540.
Who Is Exempt from the Medicare Levy?
Several categories of taxpayers may be fully or partially exempt from the Medicare Levy, including those with low income below the thresholds, foreign residents not entitled to Medicare benefits, certain DVA gold card holders, blind pensioners, and certain Defence Force members with specific medical entitlements.
Medicare Levy Surcharge (MLS)
High-income earners without private hospital cover may pay an additional Medicare Levy Surcharge of 1-1.5% on top of the standard 2% levy. The surcharge applies to singles earning over $97,000 and families over $194,000 (2024-25).
Real-World Examples
High-Income Earner with Private Insurance
Scenario: Sarah earns $110,000 and has private hospital cover.
- Medicare Levy (2%): $2,200
- MLS: $0 (has private cover)
- Total: $2,200/year
Medicare Levy Around the World
Australia's Medicare Levy is one of several healthcare financing models used by developed nations. Understanding how other countries fund public healthcare helps illustrate where Australia sits in the global context.
| Country | Healthcare Tax / Levy | Rate | Key Characteristic |
|---|---|---|---|
| Australia | Medicare Levy | 2% of taxable income | Funds universal public healthcare; surcharge up to 1.5% for high earners without private cover |
| United Kingdom | National Insurance Contributions | 8–12% (employee) | Part funds NHS; shared between employee and employer |
| Canada | Provincial health premiums (varies) | 0–$900/yr (e.g., Ontario) | Most provinces fund healthcare through general taxation, not dedicated levy |
| Germany | Krankenversicherung (Health Insurance) | ~14.6% split employer/employee | Mandatory statutory health insurance for most employees |
| France | Contribution Sociale Généralisée (CSG) | 9.2% on earned income | Broad-based social levy funding health, pensions and family benefits |
| New Zealand | No dedicated healthcare levy | N/A | Public healthcare funded through general income tax |
Australia's Medicare Levy approach is considered relatively transparent because it is an explicit, visible charge on tax returns. Most countries embed healthcare funding within broader social insurance or general taxation, making the true cost less visible to individual residents.
Frequently Asked Questions
The standard Medicare Levy rate is 2% of your taxable income. Most Australian taxpayers pay this amount to fund the public healthcare system.
For singles in 2024-25, you pay no Medicare Levy if your income is below $24,276. Between $24,276 and $30,345, you pay a reduced levy. Above $30,345, you pay the full 2%.
Yes, you still pay the standard 2% Medicare Levy even with private health insurance. However, having appropriate private hospital cover exempts you from the Medicare Levy Surcharge, which is an additional 1-1.5% for high-income earners.
The Medicare Levy Surcharge (MLS) is an additional tax of 1% to 1.5% that applies to high-income earners who do not have private hospital cover. It is designed to encourage people to take out private health insurance and reduce pressure on the public system.
The reduced levy applies to incomes between the exemption threshold and full levy threshold. It is calculated as 10% of your income over the exemption threshold. For example, at $27,000 income: ($27,000 - $24,276) x 10% = $272.40.
Yes, foreign residents for tax purposes are generally exempt from the Medicare Levy because they are not entitled to Medicare benefits. They may need to provide a Medicare Levy Exemption Certificate to their employer.
Pensioners whose taxable income falls below the low-income thresholds do not pay Medicare Levy. For 2024-25, singles must earn below $24,276 to be fully exempt. Pensioners may also qualify for the Seniors and Pensioners Tax Offset (SAPTO).
For 2024-25, the family threshold is $40,939 plus $3,760 for each dependent child. A family with 2 children has a threshold of $48,459. If family income is below this, no Medicare Levy is payable.
You may be entitled to a full or partial exemption if you are a foreign resident, certain DVA gold card holder, blind pensioner, or have income below the low-income thresholds. You claim the exemption when lodging your tax return.
The Medicare Levy applies to your taxable income, which generally includes assessable income from all sources. However, tax-free components of superannuation benefits are not subject to Medicare Levy. Taxable components of super paid to those over 60 are generally tax-free.
To avoid the MLS, you must have appropriate private hospital cover with an approved health insurer. The policy must cover you (and your family if applicable) and have an excess of $750 or less for singles, or $1,500 or less for families/couples.
The Medicare Levy itself is not refundable. However, if you overpaid tax through PAYG withholding (which includes Medicare Levy), any overpayment is refunded when you lodge your tax return. Low-income earners below the threshold may receive a full Medicare Levy exemption.
Medicare Levy is calculated on your taxable income, which is your assessable income minus allowable deductions. This includes salary, wages, business income, investment income, and capital gains, minus work-related and other eligible deductions.
Your Medicare Levy is calculated on your total taxable income from all sources. If you have multiple jobs, the levy is based on your combined income. Each employer withholds Medicare Levy based on your earnings with them, but your final tax return reconciles this against your total income.
Medicare Levy thresholds are typically updated annually in the Federal Budget to account for inflation and cost of living adjustments. The 2024-25 thresholds represent the current rates. Always check the ATO website for the most current thresholds for the tax year you are lodging.
Trusted Resources
- ATO - Medicare Levy - Official Australian Taxation Office guidance
- ATO - Medicare Levy Reduction - Low income reduction thresholds
- ATO - Medicare Levy Surcharge - MLS rates and thresholds
About This Calculator: CalculatorZone's Medicare Levy Calculator is developed by Australian tax specialists using current ATO rates and thresholds for the 2024-25 and 2025-26 financial years. Last reviewed: Feb 2026.
CalculatorZone provides educational financial tools for informational purposes only. ATO rules and thresholds apply — always verify current rates with the ATO or consult a qualified tax professional before making financial decisions.
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