Calculate and Understand Medicare Levy

The Medicare Levy

The Medicare levy is collected from most Australian taxpayers to help fund the public healthcare system. It ensures all eligible Australian residents have access to essential medical services, hospital care, and prescription medications at a reduced cost.

For the 2025-26 financial year, the Medicare levy is charged at 2% of your taxable income. This is in addition to the income tax you pay.

Exemptions and Reductions

Not everyone has to pay the full levy. You may be eligible for a reduction or a full exemption depending on your circumstances. For instance:

• Low-Income Earners: If your income is below a certain threshold, you won't have to pay the levy. There's also a phase-in limit where you pay a reduced rate.
• Medical Reasons: Certain medical conditions may qualify you for an exemption.
• Foreign Residents: If you are not entitled to Medicare benefits (which depends on your tax residency status), you can apply for an exemption.

The Medicare Levy Surcharge (MLS)

The Medicare Levy Surcharge (MLS) is an additional levy on top of the standard 2% levy. It applies to high-income earners who do not have an appropriate level of private hospital insurance.

The purpose of the MLS is to encourage individuals to take out private hospital cover to reduce the demand on the public system. The surcharge is between 1% and 1.5% of your income, depending on how much you earn. If you have the required private health insurance, you are exempt from the MLS. You can model this in our main salary calculator.