Medicare Levy Surcharge Calculator
FY 2025-26 · Should you buy private hospital cover or pay the surcharge?
Your Details
Include taxable income + reportable fringe benefits + reportable super
Basic hospital cover: ~$1,200–$2,500/yr depending on age & state
Medicare Levy Surcharge
-MLS Rate
-
Annual MLS
-
Medicare Levy (2%)
-
Total Medicare Cost
-
Private Insurance vs MLS
No Insurance
With Insurance
Your MLS Income Test
MLS Rates & Thresholds — FY 2025-26
| Tier | Single Income | Family Income | MLS Rate |
|---|---|---|---|
| Exempt | $0 – $101,000 | $0 – $202,000 | 0% |
| Tier 1 | $101,001 – $119,000 | $202,001 – $238,000 | 1.0% |
| Tier 2 | $119,001 – $151,000 | $238,001 – $302,000 | 1.25% |
| Tier 3 | $151,001+ | $302,001+ | 1.5% |
* Family threshold increases by $1,500 for each dependent child after the first.
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an additional tax on top of the standard 2% Medicare Levy. It applies to higher-income Australians who don't hold private hospital cover and is designed to encourage them to use private hospitals, reducing demand on the public system.
- MLS is separate from — and additional to — the standard Medicare Levy
- It applies to your entire income, not just the amount above the threshold
- Even extras-only ("ancillary") private cover does NOT exempt you — you need hospital cover
- The excess on your hospital policy cannot exceed $1,000 (single) or $2,000 (family)
💡 Lifetime Health Cover (LHC) loading: If you're over 31 and don't have private hospital cover, you'll also face a 2% LHC loading on your premium for every year you were without cover after age 30 (capped at 70%). This is an extra reason to take out cover sooner.
Frequently Asked Questions
What is the Medicare Levy Surcharge? ▾
The MLS is an additional 1%–1.5% tax on top of the standard 2% Medicare Levy, applied to higher-income earners who don't hold private hospital cover. It applies to your entire income, not just the amount above the threshold.
What is the 2025-26 MLS income threshold? ▾
For FY 2025-26: singles earning over $101,000 are liable. For families, the threshold is $202,000 combined, plus $1,500 per dependent child after the first. The income test includes taxable income, reportable fringe benefits, reportable employer super contributions, and total net investment losses.
Is it worth buying private health insurance to avoid the MLS? ▾
It depends. If your MLS is higher than the cost of basic hospital cover, buying cover saves you money and provides actual hospital benefits. For someone earning $105,000, MLS = $1,050. A basic hospital cover might cost $1,300–$1,800/yr — so it's close. Factor in the Lifetime Health Cover loading if you're over 31, which can add significant cost if you delay.
Do reportable fringe benefits count toward the MLS threshold? ▾
Yes. Your MLS income includes taxable income plus reportable fringe benefits amounts (RFBA), reportable employer super contributions, and total net investment losses. If you have a novated lease or salary package through your employer, the RFBA can push you over the threshold even if your taxable income appears lower.
What cover counts as 'appropriate' to avoid the MLS? ▾
You need private patient hospital cover from an Australian-registered insurer. The policy excess must not exceed $1,000 (singles) or $2,000 (families/couples). Extras-only or ancillary cover does not count — it must be hospital cover. Basic/bronze tier hospital cover is sufficient.
Is the MLS the same as the Medicare Levy? ▾
No. The Medicare Levy is a standard 2% charge for most taxpayers to fund Medicare. The Medicare Levy Surcharge is an additional charge (1%–1.5%) only for higher earners without private hospital cover. You could pay both — up to 3.5% of your income in total Medicare charges.
Related Calculators
- Medicare Levy Calculator — Calculate your standard 2% Medicare Levy and low-income exemption
- Income Tax Calculator — See your full tax breakdown including Medicare
- Take-Home Pay Calculator — Net income after all deductions
- EV Novated Lease Calculator — Note: novated lease RFBA may affect your MLS threshold
- Salary Sacrifice Calculator — Salary sacrifice doesn't reduce MLS income
⚠️ Disclaimer: This calculator provides estimates only. Individual tax situations vary. Consult a registered tax agent or financial adviser for personalised advice. MyPayAU is not affiliated with the ATO.