Understanding the Medicare Levy Surcharge (MLS)
The Medicare Levy Surcharge (MLS) is an additional tax imposed on high-income Australian taxpayers who do not have appropriate private patient hospital cover. The MLS is designed to encourage those who can afford it to take out private health insurance, reducing the burden on the public healthcare system.
How the MLS Works
For the 2025-26 financial year, the MLS applies to individuals and families with income above certain thresholds. The surcharge rate ranges from 1% to 1.5% of your taxable income, depending on how much your income exceeds the threshold.
- Singles: Base threshold of $97,000. If income is between $97,001 and $113,000, the surcharge rate is 1%. Between $113,001 and $146,000, it's 1.25%. Above $146,000, it's 1.5%.
- Families: Base threshold of $194,000 (for two adults with no dependent children), plus an additional $1,500 for each dependent child. The tier thresholds are multipliers of this base amount (1.166x for Tier 1, 1.508x for Tier 2).
Avoiding the MLS
The simplest way to avoid the Medicare Levy Surcharge is to maintain appropriate private hospital insurance for yourself and your dependents. The insurance must be with a registered health fund and provide adequate hospital cover. Having extras-only cover does not exempt you from the MLS.
Important Notes
This calculator provides estimates based on ATO guidelines for the 2025-26 financial year. Actual tax obligations may vary based on your specific circumstances, deductions, and other factors. We recommend consulting with a qualified tax professional or visiting the ATO website for official advice.