How the Medicare levy works
The Medicare levy is 2% of your taxable income and helps fund Australia's public health system. Most taxpayers pay it in full. If you are on a low income you pay a reduced levy or none at all: for 2025-26 a single person pays no levy below $28,011, then a levy phased in at 10 cents per dollar until the full 2% applies at $35,013. Families get higher thresholds that rise with each dependent child, and seniors and pensioners eligible for SAPTO have higher thresholds again. This medicare levy reduction calculator applies whichever set fits your household.
The Medicare levy exemption
Some people qualify for a Medicare levy exemption, which reduces the levy by half or to nil regardless of income. You may be eligible if you were a foreign resident for the year, if you were not entitled to Medicare benefits (you claim this with a Medicare entitlement statement), or if you meet one of the medical categories the ATO sets out. Low earners below the thresholds above pay no levy without needing an exemption. If you think an exemption applies, check your eligibility with the ATO before you lodge, since this calculator estimates the levy for people who are not exempt.
The Medicare levy surcharge, and when it applies
The Medicare levy surcharge is separate. It applies only to higher earners without an appropriate level of private hospital cover. For 2025-26 the base tier is $101,000 for singles and $202,000 for families, with the family threshold rising by $1,500 for each dependent child after the first. Above the base tier the surcharge is 1%, 1.25% or 1.5% of your income, charged on the whole amount at the flat tier rate. Hold hospital cover for the full year and the surcharge is nil, and for many people a basic hospital policy costs about the same as a Tier 1 surcharge. This medicare levy surcharge calculator shows exactly why the surcharge is or is not charged for your inputs.
Frequently asked questions
How do you calculate your Medicare levy?
Take 2% of your taxable income. Most people pay it in full, so a $90,000 income means a $1,800 levy. If your income is in the low-income range the levy is reduced: nothing below the lower threshold, then a shade-in of 10 cents per dollar until the full 2% applies at the upper threshold. For 2025-26 the single lower threshold is $28,011 and the full 2% applies from $35,013.
How much is the Medicare levy on $80,000?
The Medicare levy on an $80,000 taxable income is $1,600, which is 2% of $80,000. That is above the low-income thresholds, so the full levy applies. If you also earn above the surcharge threshold and hold no private hospital cover, the Medicare levy surcharge would be added on top.
How can I avoid the 2% Medicare levy?
The 2% levy is reduced or removed by a Medicare levy exemption or reduction, not by choice. You pay no levy if your taxable income is below the low-income threshold ($28,011 for singles in 2025-26), and a reduced levy in the shade-in band above it. Full or half exemptions apply to some people, including certain foreign residents, people not entitled to Medicare benefits (you claim this with a Medicare entitlement statement), and some who meet a medical condition category. The surcharge, which is separate, is avoided by holding private hospital cover.
What is the income limit for the Medicare levy in 2025-26?
Singles pay no Medicare levy if taxable income is $28,011 or less, with a phased-in levy up to $35,013. Families start at $47,238, rising by $4,338 for each dependent child. Seniors and pensioners entitled to SAPTO have higher thresholds of $44,268 for singles.
Who pays the Medicare levy surcharge?
The Medicare levy surcharge applies to people without an appropriate level of private hospital cover whose income is above the base tier. For 2025-26 that is $101,000 for singles and $202,000 for families. With private hospital cover for the full year the surcharge is nil.
How much is the Medicare levy surcharge?
The surcharge is 1%, 1.25% or 1.5% of your income, depending on the tier. For 2025-26 singles, Tier 1 runs from $101,001 to $118,000, Tier 2 from $118,001 to $158,000 and Tier 3 from $158,001. It is charged on your whole income at that flat rate, not just the amount over the threshold. Holding private hospital cover for the full year is often close in cost to a Tier 1 surcharge, so it can be worth comparing the two.
This tool is a guide, not tax or financial advice.
