Can I be exempt from the Medicare levy?

Yes, in limited circumstances: you're a foreign resident for the entire year, you have an exemption category (serving in defence forces abroad, etc.), or you hold a Medicare Entitlement Statement. Low-income earners may be exempt or pay a reduced rate. You cannot opt out simply because you don't use Medicare.

What counts as 'compliant' private health insurance for MLS?

Only private hospital cover with an excess of $750 or less for singles ($1,500 for families) qualifies. It must include psychiatric, rehabilitation, and palliative care cover. Extras-only or ambulance-only policies do NOT satisfy the MLS requirement.

How does the Private Health Insurance Rebate work?

The government provides an income-tested rebate on private health premiums. For 2024-25: under $93,000 (singles) = ~24.6% rebate, $93,001-$108,000 = ~16.4%, $108,001-$144,000 = ~8.2%, over $144,000 = 0%. The rebate can be applied as a premium reduction or claimed at tax time.

Medicare Levy Calculator

Calculator

Calculate your Medicare levy and Medicare Levy Surcharge. See if you qualify for a reduction or exemption, and whether you need private health insurance.

Free to useNo data storedAI insightsUpdated: February 2026

All Australian residents pay the Medicare levy — a 2% tax on taxable income that funds the public healthcare system. But it doesn't stop there. High-income earners without private hospital cover also pay the Medicare Levy Surcharge (MLS) — an additional 1% to 1.5%. Understanding both is essential: sometimes private health insurance (at ~$1,200-$2,000/year) costs LESS than the MLS (which can be $2,000+). This calculator shows you exactly what you owe and whether getting health cover makes financial sense.

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Real-World Examples

Single Earner Without Health Cover

Jake earns $110,000 and doesn't have private hospital cover.

Medicare levy: $2,200 (2%). MLS at 1.25%: $1,375. Total Medicare-related tax: $3,575. Basic hospital cover would cost ~$1,200-$1,800/year. Jake saves $375-$975 by getting health cover PLUS gets the benefit of actual hospital insurance.

Low-Income Reduction

Maria is a student earning $27,000 from part-time work.

At $27,000, Maria is in the Medicare levy reduction zone ($24,276-$30,345). Her reduced levy is approximately $272 instead of $540. Below $24,276, she'd pay no Medicare levy at all.

Frequently Asked Questions

Glossary

Medicare Levy

A 2% tax on taxable income for all Australian residents to fund the public healthcare system. Most residents pay this; low-income earners may qualify for reduction or exemption.

Medicare Levy Surcharge (MLS)

An additional 1-1.5% levy on high-income earners who don't have compliant private hospital cover. Applies to singles over $93,000 and families over $186,000.

Lifetime Health Cover (LHC)

A government initiative that adds 2% to your private health insurance premium for every year past age 30 that you didn't have hospital cover. The loading is removed after 10 continuous years of cover.

Private Health Insurance Rebate

An income-tested government rebate that reduces the cost of private health insurance premiums. The percentage decreases as income increases.

Related Tools

Income Tax Calculator

See your total tax including Medicare levy in the full breakdown.

Tax Refund Estimator

Include Medicare levy and MLS in your refund calculation.

FBT Calculator

Check if reportable fringe benefits push you into MLS territory.

How to Use

1Enter your taxable income.
2Select your family status (single, couple, or family).
3Add the number of dependent children if applicable.
4Indicate whether you have private hospital cover.
5Enter your spouse's income if applicable.
6See your Medicare levy, any MLS, and a private health insurance comparison.

Key Information

The Medicare levy is 2% of taxable income for all Australian residents.
Low-income individuals pay a reduced levy: $0 below $24,276, phasing in to full 2% at $30,345 (singles, 2024-25).
MLS applies to singles earning over $93,000 and families over $186,000 (2024-25) WITHOUT private hospital cover.
MLS rates: $93,001-$108,000 = 1%, $108,001-$144,000 = 1.25%, over $144,000 = 1.5%.

Pro Tips

If you earn just over $93,000 without hospital cover, basic hospital cover (~$100/month) is often cheaper than the MLS.
The MLS uses 'income for surcharge purposes' — includes taxable income, reportable fringe benefits, and super salary sacrifice. You can't salary-sacrifice your way below the threshold.
Lifetime Health Cover (LHC) loading adds 2% to your premium for every year you're over 30 without cover. If you're 35, that's 10% extra. Get cover by July 1 after your 31st birthday.
Some employers offer corporate health insurance rates — always check before buying individually.

Avoid These Mistakes

Not realising the MLS income includes reportable fringe benefits and net investment losses — your actual 'income' for MLS may be higher than taxable income.
Thinking any health insurance counts — only compliant HOSPITAL cover satisfies the MLS. Extras-only policies don't count.
Ignoring the Lifetime Health Cover loading — delaying private health past 30 permanently increases your premium.
Not claiming the Private Health Insurance Rebate — income-tested, but most Australians qualify for some level of rebate.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026