Use the full Medicare Levy Surcharge calculator to work out your exact MLS in under 30 seconds, or the quick version embedded below. Enter your income, family status, and hospital-cover status — the calculator returns your tier, the dollar amount you'd pay, and a verdict on whether private hospital cover costs less than the surcharge. Below: the tier tables for 2026–27 and for your 2025–26 return, the income definition that catches most Australians out (it's not just your salary), and how the surcharge compares with the cost of hospital cover.
Quick answer — MLS thresholds at a glance:
- 2026–27 (the current income year, from 1 July 2026): $105,000 singles / $210,000 families — single tiers $105k / $123k / $164k, family tiers $210k / $246k / $328k, plus $1,500 per dependent child after the first
- 2025–26 (for your 2025–26 tax return): $101,000 singles / $202,000 families — single tiers $101k / $118k / $158k, family tiers $202k / $236k / $316k
Work out your exact surcharge and the hospital-cover break-even → MLS Calculator
The Medicare Levy Itself Is 2% — the Surcharge Is Extra
Two different charges get mixed up constantly, so here is the distinction in one place. The standard Medicare levy is 2% of taxable income — the same rate for 2026–27 and for 2025–26 returns — and almost every taxpaying Australian pays it as part of normal tax withholding. Low earners pay less or nothing: for 2025–26, a single with taxable income of $28,011 or less pays no levy at all, with a reduced levy shading in above that before the full 2% applies. The 2026–27 threshold is set in the May 2027 Budget.
The Medicare Levy Surcharge is a different, additional charge of 1%–1.5% that only applies if you earn above the threshold ($105,000 single / $210,000 family for 2026–27; $101,000 / $202,000 for 2025–26) and don't hold private hospital cover. Everything below this line is about the surcharge — if you're just confirming the levy rate for your return, it's 2%, and the tax calculator includes it automatically.
MLS Tiers and Rates for 2026–27
There are three MLS tiers for 2026–27. The Medicare Levy Surcharge applies at 1.00%, 1.25%, or 1.50% of your full income depending on which tier you fall into. Singles above $105,000 and families above $210,000 without private hospital cover pay it on top of the standard 2% Medicare levy.
| Tier | Single income | Family income | MLS rate | Single $/yr |
|---|---|---|---|---|
| Base | ≤ $105,000 | ≤ $210,000 | 0% | $0 |
| Tier 1 | $105,001 – $123,000 | $210,001 – $246,000 | 1.00% | $1,050 – $1,230 |
| Tier 2 | $123,001 – $164,000 | $246,001 – $328,000 | 1.25% | $1,538 – $2,050 |
| Tier 3 | $164,001 + | $328,001 + | 1.50% | $2,460 + |
Family threshold rises by $1,500 for each dependent child after the first. Once you're over the threshold, the MLS is charged on all of your taxable income plus any reportable fringe benefits, not just the excess. Crossing a tier line by $1 costs about $308 more at $123,001 and $410 more at $164,001. Source: privatehealth.gov.au, Medicare levy surcharge thresholds 2026–27 (checked 19 October 2026).
Why the MLS Hits Hardest at Tier Boundaries
Take a single earning $110,000 with no private hospital cover. In 2026–27 they pay $1,100 in Medicare levy surcharge (Tier 1, 1% of income) on top of the standard 2% Medicare levy ($2,200): $3,300 in health levies before any medical costs. A pay rise to $124,000 moves them into Tier 2, and the surcharge jumps to $1,550.
Work out your MLS in under 30 seconds
Enter your income, family status, and hospital-cover status. The calculator returns your tier, the dollar amount, and whether hospital cover would save you money.
What Is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is a federal tax applied to Australian residents who meet two conditions simultaneously:
- Their income exceeds the MLS threshold for the year, AND
- They do not hold private hospital cover for the full financial year
It is entirely separate from the standard 2% Medicare Levy, which funds the public health system and applies to almost every Australian with taxable income above $28,011 (the 2025–26 low-income threshold). The MLS is an additional layer on top — a surcharge, not a replacement. Its purpose is to encourage higher-income earners to use the private hospital system and reduce demand on public hospitals.
Only private hospital cover counts. Extras-only policies covering dental, optical, or physiotherapy do not exempt you. You need a complying hospital policy from a registered Australian private health insurer (search privatehealth.gov.au to compare).
"The MLS costs $1,100 a year at $110,000 income, or $3,660 a year at $244,000. For most Tier 2 and Tier 3 earners, hospital cover is cheaper."— Based on the 2026–27 MLS rates
The Latest Change: $101,000 → $105,000 on 1 July 2026
The single base threshold rose from $101,000 to $105,000 on 1 July 2026, and every tier line moved up with it. Singles earning between $101,001 and $105,000 without hospital cover paid the surcharge for 2025–26, but pay none for 2026–27.
For families, the threshold rose from $202,000 to $210,000. The family threshold covers you, your spouse, and any dependent children. Each dependent child after the first adds $1,500 to the family threshold. A year earlier, on 1 July 2025, the thresholds rose from $97,000 to $101,000 for singles and from $194,000 to $202,000 for families.
MLS Tiers for 2025–26 (Your 2025–26 Return)
Your 2025–26 tax return uses the 2025–26 tiers below. The surcharge applies to your entire taxable income (plus any reportable fringe benefits), not just the amount above the threshold, so each tier line is a cliff.
| Tier | Single Income | MLS Rate | MLS at Floor | MLS at Ceiling |
|---|---|---|---|---|
| None | ≤ $101,000 | 0% | $0 | $0 |
| Tier 1 | $101,001 – $118,000 | 1.0% | $1,010 | $1,180 |
| Tier 2 | $118,001 – $158,000 | 1.25% | $1,475 | $1,975 |
| Tier 3 | $158,001+ | 1.5% | $2,370 | — |
Family thresholds: $202,000 / $236,000 / $316,000. Source: privatehealth.gov.au, Medicare Levy Surcharge — income thresholds and rates 2025–26.
Is Hospital Cover Cheaper Than the MLS?
It depends on your income, your age and the policy. The cheapest basic hospital cover for a single was about $1,556 a year after the 1 April 2026 premium rise. In 2026–27 that's more than the 1% Tier 1 surcharge (at most $1,230), so paying the surcharge usually costs less in Tier 1. From $123,001 (Tier 2) the surcharge is $1,538 or more, and from about $124,500 it costs more than that cheapest cover. In Tier 3 ($164,001 and up) it's at least $2,460, and hospital cover is cheaper at almost any premium.
Two things change the answer: the Lifetime Health Cover loading, which adds 2% to your premium for every year you are over 30 when you first take out hospital cover (up to 70%), and the income-tested private health insurance rebate, which lowers the premium below Tier 3. The full break-even table, with worked examples for singles and a family, is in Hospital cover or MLS: the verdict at your income.
Enter your income and private health status — Velofy calculates your Medicare Levy Surcharge to the dollar and compares it against every available tax-saving strategy.
Calculate My MLS → Free · ATO 2025–26 · No signupHow to Legally Avoid or Reduce the MLS
Option 1 — Get Complying Hospital Cover
The most direct method: hold a complying hospital policy. The surcharge is worked out day by day and applies only to the days you weren't covered, so cover that starts now stops it from that day. Holding cover for the whole financial year avoids it completely.
Does Salary Sacrifice Lower the MLS? No
Salary sacrifice into super lowers your taxable income, but not your income for MLS purposes. Salary-sacrificed amounts are reportable employer super contributions, and personal super contributions you claim as a tax deduction are reportable super contributions too. The ATO adds both back when it works out which MLS tier you are in.
At $125,000 (Tier 2 in 2026–27), sacrificing $3,000 into super brings taxable income down to $122,000, but MLS income stays at $125,000, so you stay in Tier 2. The surcharge is charged on taxable income, so it dips only slightly: from $1,562.50 to $1,525 (1.25% of $122,000). Salary sacrifice can still cut your income tax — see our salary sacrifice guide.
Option 2 — Reduce Taxable Income With Deductions
Profession-specific deductions, home office expenses and self-education costs all reduce your taxable income — which feeds into your MLS tier. In 2026–27, a $5,000 deduction at $126,000 drops you to $121,000 (Tier 1 from Tier 2), saving $365 in MLS ($1,575 → $1,210) on top of the income-tax saving on the $5,000. A net loss on an investment property is different: it lowers taxable income, but the ATO adds it back when working out your MLS tier.
Option 3 — Check Your Actual MLS Income
Your MLS income threshold calculation includes: taxable income, reportable fringe benefits (RFB), reportable employer super contributions (RESC), and total net investment losses. Many employees underestimate their MLS income by ignoring RESC — the difference between what their employer actually contributes and the SGC minimum. Check your income statement in myGov before assuming you are below the threshold.
- MLS = 1%–1.5% extra tax if you earn over $105,000 (single) without hospital cover in 2026–27; the 2025–26 threshold was $101,000
- Threshold rose from $101K to $105K on 1 July 2026 — no MLS if you earn between $101K and $105K in 2026–27
- Three tiers (2026–27): 1% ($105K–$123K), 1.25% ($123K–$164K), 1.5% ($164K+)
- Three tiers (2025–26 returns): 1% ($101K–$118K), 1.25% ($118K–$158K), 1.5% ($158K+)
- Applies to your full income, not just the amount above the threshold
- Extras-only cover does not exempt you — hospital cover only
- At Tier 1, paying the MLS is often cheaper than basic hospital cover
- At Tier 2 and above, hospital cover typically costs less than the MLS
- Work deductions can reduce your income tier; salary sacrifice and deductible super contributions cannot
Velofy's Tax Advisor calculates MLS, Medicare Levy, LITO, and all profession-specific deductions — ranked by dollar saving for your 2025–26 return.
Run My Tax Strategy → Free · ATO 2025–26 · No signupExplains the Medicare Levy Surcharge tiers, the private health income test, reportable fringe benefits, and how to assess whether cover pays off at your income.
Shop on Amazon AU →Tracks private health premiums, out-of-pocket costs, and super contributions alongside your income — useful for deciding whether to hold or drop hospital cover each year.
Shop on Amazon AU →Frequently Asked Questions
How do I calculate my Medicare Levy Surcharge for 2026–27?
In three steps. First, work out your income for surcharge purposes: taxable income, plus reportable fringe benefits, plus super you salary sacrifice or claim as a deduction, plus any net investment losses. Second, find your tier. For singles in 2026–27, $105,001–$123,000 is Tier 1 (1%), $123,001–$164,000 is Tier 2 (1.25%), and $164,001 or more is Tier 3 (1.5%); family thresholds are double. Third, multiply your taxable income (plus any reportable fringe benefits) by that rate. Example: a single earning $128,000 with no hospital cover is in Tier 2, so pays $128,000 × 1.25% = $1,600. For your 2025–26 tax return, use the 2025–26 tiers instead.
What is the Medicare Levy Surcharge?
An extra 1% to 1.5% tax for Australian residents who earn over the income threshold and don't have private hospital cover. It's separate from the standard 2% Medicare levy. You avoid it by holding an eligible hospital policy from a registered Australian health fund.
What is the MLS threshold for 2026–27?
From 1 July 2026 it's $105,000 for singles and $210,000 for families, plus $1,500 for each dependent child after the first. Single tiers: $105,001–$123,000 is 1%, $123,001–$164,000 is 1.25%, and $164,001 or more is 1.5%. Family tiers: $210,001–$246,000, $246,001–$328,000 and $328,001 or more. Your 2025–26 tax return uses the 2025–26 thresholds of $101,000 and $202,000; the new ones apply to income you earn from 1 July 2026.
What is the MLS threshold for 2025–26?
$101,000 for singles and $202,000 for families, up from $97,000 and $194,000 in 2024–25. If your income for surcharge purposes is $101,000 or less, you don't pay it, whether or not you have private health insurance. That income includes reportable fringe benefits, super you salary sacrifice or claim as a deduction, and net investment losses.
What are the MLS income tiers for 2025–26?
For singles: Tier 1 (1%) is $101,001–$118,000, Tier 2 (1.25%) is $118,001–$158,000, and Tier 3 (1.5%) is $158,001 or more. For families: $202,001–$236,000, $236,001–$316,000 and $316,001 or more. The rate applies to all of your taxable income, not just the part over the threshold, so going $1 over a tier line can cost you hundreds of dollars more.
Is the Medicare levy 2% for 2025–26?
Yes, and for 2026–27 too. It's 2% of your taxable income and is already taken out of your pay along with your tax. Low earners pay less or none: for 2025–26, a single person with taxable income of $28,011 or less pays no levy, and a reduced levy applies above that until the full 2% kicks in at $35,014. The surcharge (1% to 1.5%) is a separate, extra charge for people without hospital cover: above $105,000 for singles or $210,000 for families in 2026–27, and above $101,000 or $202,000 in 2025–26.
Is private health insurance cheaper than paying the MLS?
It depends on your income. In 2026–27, Tier 1 ($105,001–$123,000) means $1,050–$1,230 a year in surcharge. The cheapest basic hospital cover for a single was about $1,556 a year after the April 2026 premium rise, so the surcharge is usually cheaper in Tier 1. In Tier 2 ($123,001–$164,000) the surcharge is $1,538–$2,050, and from about $124,500 it costs more than that cheapest cover. In Tier 3 ($164,001 and up) it's more than $2,460 a year, and most hospital policies cost less. Compare policies at privatehealth.gov.au before deciding.
Does extras-only private health insurance exempt me from the MLS?
No. Only private hospital cover exempts you. Extras-only cover, such as dental, optical or physio, doesn't count. You need a hospital policy from a registered Australian health fund, with an excess of $750 or less for singles ($1,500 or less for couples and families).