Medicare levy and Medicare levy surcharge: what each one is
Type your taxable income and say whether you held hospital cover: the levy, the surcharge and the total appear on separate lines.
Medicare levy and surcharge, 2026-27
$4,225
2 % levy that almost everyone pays, plus 1.25 % surcharge without hospital cover.
| Medicare levy | $2,600 |
| Medicare levy surcharge | $1,625 |
| Share of taxable income | 3.25 % |
Prepared by Radif Partners · How the figures are built · thresholds read on ato.gov.au, premiums from privatehealth.gov.au data · not tax advice
The Medicare levy and the Medicare levy surcharge share a name and a line on your notice of assessment, but they are two different charges. The Medicare levy is 2 %, paid by most Australian taxpayers whether or not they hold private health insurance; people on low incomes have it reduced or removed, and some groups, such as foreign residents and temporary residents not entitled to Medicare, can claim an exemption. The surcharge is an extra 1 % to 1.5 %, paid only by people whose income for MLS purposes is above the threshold, $105,000 for a single person in 2026-27, and who do not hold an appropriate level of private hospital cover. Private hospital cover removes the surcharge, never the levy. At $130,000 of taxable income without cover, a single person pays $2,600 of levy and $1,625 of surcharge. The ATO adds the two and shows them as one amount.
Side by side
| Medicare levy | Medicare levy surcharge | |
|---|---|---|
| Rate | 2 % | 1 %, 1.25 % or 1.5 % |
| Who pays | most taxpayers | income over $105,000 single or $210,000 family, without appropriate hospital cover |
| Removed by hospital cover | no | yes, for the days covered |
| Low-income relief | yes (2025-26 single lines $28,011 and $35,013) | not needed: no surcharge under the threshold |
| Removed by a levy exemption | yes | yes, if every dependant is exempt too |
| On the notice of assessment | one line: Medicare levy and surcharge | same line |
The surcharge has a purpose of its own: PrivateHealth.gov.au describes it as a way to encourage people on higher incomes to take out private hospital cover and, where possible, to use the private system, which reduces demand on the public one. That is why the surcharge, and only the surcharge, disappears when you hold an appropriate hospital policy.
What the two cost together
For a single person without dependants and without hospital cover, the table adds the levy to the 2026-27 surcharge. The levy is shown at the full rate; it is lower only for incomes far below the first row.
| Taxable income | Medicare levy | Surcharge without cover | Total | Share of taxable income |
|---|---|---|---|---|
| $60,000 | $1,200 | $0 | $1,200 | 2.00 % |
| $100,000 | $2,000 | $0 | $2,000 | 2.00 % |
| $110,000 | $2,200 | $1,100 | $3,300 | 3.00 % |
| $130,000 | $2,600 | $1,625 | $4,225 | 3.25 % |
| $170,000 | $3,400 | $2,550 | $5,950 | 3.50 % |
| $250,000 | $5,000 | $3,750 | $8,750 | 3.50 % |
Below the threshold, the total share is the levy alone. The first dollar over the threshold switches the surcharge on for the whole income, not for the part above it, so the total share jumps from 2 % to 3 % in a single step. It climbs again at each tier boundary, to 3.5 % at the top, where a person without cover pays three quarters of the levy again on top of it.
With and without hospital cover
Medicare levy and surcharge, 2026-27
$3,200
| Medicare levy | $3,200 |
| Medicare levy surcharge | $0 |
| Share of taxable income | 2.00 % |
The low-income reduction belongs to the levy only
People on low incomes do not pay the full levy. For 2025-26, the latest year the ATO has published, a single taxpayer whose taxable income is $28,011 or less pays no levy at all, and between $28,011 and $35,013 the levy is reduced; the ATO works out the reduction when it assesses the return. For people entitled to the seniors and pensioners tax offset, the lines are $44,268 and $55,335. A family can also qualify for a reduction based on family taxable income. None of this touches the surcharge, which never applies at such incomes anyway. The 2026-27 low-income lines are upcoming: they were not published on 19 October 2026, and we will enter them on the day they are.
Exemptions: one door, two charges
A Medicare levy exemption works for both charges. The ATO lists exemptions for certain medical conditions, for foreign residents and for people who were not entitled to Medicare benefits, and the M2 instructions treat anyone in a levy exemption category for a period as exempt from the surcharge for that period, as long as all their dependants were also covered or exempt. A temporary resident with a Medicare Entitlement Statement and no dependants therefore pays neither the levy nor the surcharge for the days on the statement. Visa holders and expats sets out who qualifies.
Couples: one test is personal, the other is shared
Each partner's Medicare levy is worked out on their own return, from their own taxable income. The surcharge is different: the tier comes from the couple's combined income for MLS purposes, tested against the family threshold of $210,000, and each partner then pays the rate of that tier on their own taxable income and reportable fringe benefits. Two partners on $120,000 each pay the full levy on their own income, and if they hold no hospital cover they also share a family tier set by $240,000 of combined income. Cover for one partner only is not enough: the ATO requires an appropriate level of cover for you, your spouse and all your dependants. The couples page works through the split.
Reading your notice of assessment
The ATO works out both amounts from what your return says and prints them together, as Medicare levy and surcharge. If the line looks higher than 2 % of your taxable income, the difference is usually the surcharge, or a part-year of it. Rebuild it from the M2 question: the number of days you and your dependants held an appropriate level of hospital cover, your income for MLS purposes, and your tier. The income for MLS purposes page explains the income, and part-year cover the days.