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: on the latest published thresholds 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.
One caveat on those low-income figures. The ATO sets them for an income year retrospectively, normally in the following Budget, so the 2026-27 versions have not been published. The thresholds above are the most recent official set and are what the calculator uses. They will be confirmed, and probably nudged up a little, once the legislation lands. The surcharge thresholds further down are different: those are confirmed 2026-27 figures.
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 2026-27 the base tier is $105,000 for singles and $210,000 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. On the latest published thresholds the single lower figure is $28,011 and the full 2% applies from $35,013. The ATO sets the low-income thresholds for a year retrospectively, usually in the following Budget, so the 2026-27 versions are not out yet and these are the current best figures.
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 on the latest published thresholds), 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 2026-27?
On the latest published thresholds, 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. The 2026-27 figures have not been released, because the ATO legislates them retrospectively in the following Budget. Expect a small increase when they land.
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 2026-27 that is $105,000 for singles and $210,000 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 2026-27 singles, Tier 1 runs from $105,001 to $123,000, Tier 2 from $123,001 to $164,000 and Tier 3 from $164,001. Family thresholds are double those figures: $210,000, $246,000 and $328,000. 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.
Do you pay the Medicare levy if you have private health insurance?
Yes. The 2% Medicare levy applies whether or not you hold private health insurance, so private cover does not remove it. What private hospital cover can remove is the separate Medicare levy surcharge, the extra 1% to 1.5% charged to higher earners who go without an appropriate level of hospital cover. Hold hospital cover for the full year and the surcharge is nil, but the base 2% levy still applies.
Does everyone pay the Medicare levy?
No. Most taxpayers pay the full 2%, but low earners pay a reduced levy or none at all. On the latest published thresholds a single person pays no levy below $28,011, then a phased-in levy up to $35,013. Families and SAPTO-eligible seniors have higher thresholds. Some people also qualify for a full or half exemption, including certain foreign residents and people not entitled to Medicare benefits.
How does the Medicare levy reduction work?
The reduction shades the levy in gradually for low-income earners so it does not jump straight to the full 2%. Below the lower threshold ($28,011 for a single on the latest published thresholds) you pay no levy. Between the lower and upper thresholds ($28,011 to $35,013) the levy is charged at 10 cents per dollar of income above the lower figure, which is less than 2%. At the upper threshold and above, the full 2% applies. Families get a higher lower threshold of $47,238, rising by $4,338 for each dependent child, and SAPTO-eligible singles start at $44,268.
This tool is a guide, not tax or financial advice.
