Medicare Levy Calculator Australia — Free 2026
Calculate your Australian Medicare levy and Medicare Levy Surcharge for 2025-26. Covers singles, families, private health insurance, low-income reductions, and exemptions — all in one place.
How It Works
- Enter your taxable income
- Select your situation
- Review your Medicare costs
Understanding the Australian Medicare Levy
The Medicare levy is a 2% tax applied to most Australian residents' taxable income to help fund Medicare — Australia's universal public health system. Introduced in 1984, the levy is collected alongside income tax and automatically deducted from wages by employers. For the 2025-26 financial year, the levy operates under a low-income reduction scheme that phases in the liability gradually for lower earners.
Standard Medicare Levy (2%)
For most taxpayers, the Medicare levy is simply 2% of taxable income. However, low-income earners benefit from a reduction scheme that shields those below the phase-in threshold from paying the full levy:
- Singles: No levy if taxable income is at or below $24,276. Between $24,276 and $30,345, you pay 10% of the excess over $24,276 (reduced levy). Above $30,345, the full 2% applies.
- Families: No levy below $40,939 (increases by $3,760 per dependent child). A reduced levy applies between $40,939 and $51,174 (plus $4,700 per child). Full 2% applies above $51,174.
Medicare Levy Surcharge (MLS)
The Medicare Levy Surcharge is an additional tax — on top of the standard 2% levy — applied to higher-income earners who do not hold an appropriate level of private hospital insurance. The surcharge is tiered based on income:
| Tier | Single Income | Family Income | MLS Rate |
|---|---|---|---|
| No surcharge | $0 – $93,000 | $0 – $186,000 | 0% |
| Tier 1 | $93,001 – $108,000 | $186,001 – $216,000 | 1.0% |
| Tier 2 | $108,001 – $144,000 | $216,001 – $288,000 | 1.25% |
| Tier 3 | $144,001+ | $288,001+ | 1.5% |
The MLS applies to your entire taxable income (not just the portion above the threshold). This means a single person earning $93,001 could pay $930 in surcharge — often more than the cost of a basic hospital policy. For many people in Tier 1, taking out private hospital cover works out cheaper than paying the surcharge. Use our Australian Income Tax Calculator to see how the MLS fits into your total tax position.
Medicare Levy Exemptions
Some people are entitled to a full or half Medicare levy exemption. A full exemption means you pay no Medicare levy at all. A half exemption reduces your levy by 50%. You may qualify if:
- You are a foreign resident for Australian tax purposes
- You were not entitled to Medicare benefits for part or all of the year (e.g., certain visa holders)
- You hold a Medicare levy exemption certificate from the ATO
- Certain members of the ADF or their families in qualifying circumstances
Note that exemptions apply only to the standard 2% levy — the Medicare Levy Surcharge is a separate obligation governed by different eligibility rules.
Family Thresholds and Dependent Children
Families with dependent children or students have higher low-income thresholds. The base family threshold of $40,939 increases by $3,760 for each dependent child. So a family with two children would not begin paying levy until combined income exceeds $48,459, and would not pay the full 2% until income exceeds $60,574. These thresholds are adjusted by the ATO each income year. For a complete picture of take-home pay including Medicare and income tax, see our Australian Salary Calculator.
Frequently Asked Questions
The Medicare levy is a 2% tax on your taxable income that helps fund Australia's public health system, Medicare. Most Australian residents pay it automatically through their income tax. For example, on a $85,000 income, the Medicare levy is $1,700 per year — assuming no low-income reduction applies.
The Medicare Levy Surcharge (MLS) is an additional tax of 1% to 1.5% applied to singles earning over $93,000 (or families over $186,000) who do not hold an appropriate level of private hospital cover. It is designed to encourage higher-income earners to take out private health insurance to reduce pressure on the public system. Tier 1 is 1% ($93,001–$108,000 single), Tier 2 is 1.25% ($108,001–$144,000), and Tier 3 is 1.5% ($144,001+).
You may be fully or partially exempt from the Medicare levy if you are a foreign resident, were not entitled to Medicare benefits, or certain low-income earners. People with certain conditions that prevented them from benefiting from Medicare, members of the Australian Defence Force in some circumstances, and individuals with a formal Medicare levy exemption certificate may also qualify. A full exemption reduces your levy to zero; a half exemption reduces it by 50%.
Private health insurance does not reduce the standard 2% Medicare levy. However, holding an appropriate level of private hospital cover does exempt you from the Medicare Levy Surcharge (MLS). If you earn over $93,000 as a single or $186,000 as a family and do not have private hospital cover, you will pay the MLS on top of your standard levy. In many cases, the cost of a basic hospital policy is less than the surcharge you would otherwise pay.
For families, the Medicare levy low-income threshold for 2025-26 is $40,939. No levy applies below this figure. The threshold increases by $3,760 for each dependent child or student. A reduced levy phase-in applies between $40,939 and $51,174 (plus $4,700 per dependent for the upper threshold). This means a family with two children would have no levy below $48,459 and pay full levy only above $60,574.
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