Medicare Levy Surcharge Calculator (2026-27)

Quick answer

For 2026-27, if your income for MLS purposes is above $105,000 (single) or $210,000 (family) and you do not hold an appropriate level of private patient hospital cover, you may owe an extra 1% to 1.5% on top of the ordinary 2% Medicare levy. The calculator above estimates that surcharge. It is not a substitute for your ATO assessment.

What the Medicare Levy Surcharge is (and is not)

The Medicare Levy Surcharge is a deliberate policy nudge: higher earners who can afford private hospital cover are asked to pay more tax if they stay fully on the public system. It is not the same thing as the Medicare levy.

• Medicare levy — usually 2% of taxable income for most Australian residents. Most people already pay this. See our income tax calculator for take-home pay including the levy.
• Medicare Levy Surcharge — an extra 1%, 1.25% or 1.5% when income for MLS purposes is above the threshold and you lack qualifying hospital cover for some or all of the year.

You can owe the levy, the surcharge, both, or neither. They are assessed separately.

2026-27 MLS thresholds and rates

These are the official tiers for the 2026-27 income year (1 July 2026 to 30 June 2027):

Sources: ATO MLS income thresholds and rates; privatehealth.gov.au Medicare Levy Surcharge. Family threshold increases by $1,500 for each MLS dependent child after the first.

Two different “incomes” (this is where people get caught)

The ATO uses a broader figure — income for MLS purposes — to decide which tier you are in. That figure typically adds:

• Taxable income (excluding certain FHSS released amounts)
• Reportable fringe benefits
• Net investment losses (financial + rental property)
• Reportable super contributions (reportable employer + deductible personal)
• Certain other amounts (for example, amounts on which family trust distribution tax has been paid)

But the surcharge dollars are calculated as the tier rate applied to taxable income + reportable fringe benefits (plus any family trust distribution tax amount). Reportable super and net investment losses can push you into a higher tier without sitting in the surcharge base. That distinction matters if you salary sacrifice.

Worked example 1 — single, $130,000, no cover

Assume a single resident with $130,000 taxable income, no fringe benefits, no reportable super, no investment losses, and no private hospital cover for the full year.

• Income for MLS purposes: $130,000 → Tier 2
• Rate: 1.25%
• Surcharge base: $130,000
• Estimated MLS: $130,000 × 1.25% = $1,625 for the year

That is roughly $135 a month. Whether a basic hospital policy costs more or less than $1,625 depends on your age, state, excess and rebate tier — enter your own quote above rather than trusting a generic “cover saves” claim.

Worked example 2 — ATO-style fringe benefits (Tom)

The ATO publishes a worked example along these lines for 2026-27: Tom has taxable income of $90,000 and reportable fringe benefits of $27,000.

• Income for MLS purposes: $90,000 + $27,000 = $117,000 → Tier 1
• Rate: 1%
• Surcharge base: also $117,000 in this case
• MLS: $117,000 × 1% = $1,170 if uncovered for the year

Tom’s taxable income alone ($90,000) is below the single threshold. The fringe benefits are what pull him over the line.

Worked example 3 — salary sacrifice does not “dodge” MLS

Suppose your taxable income would have been $130,000, but you salary sacrifice $15,000 into super. Taxable income falls to $115,000. If that $15,000 is a reportable contribution, income for MLS purposes is still about $130,000.

• Tier still looks like Tier 2 (1.25%) based on ~$130,000 MLS income
• Surcharge base is closer to the $115,000 taxable income (plus any FBT)
• Estimated full-year MLS ≈ $115,000 × 1.25% = $1,438 — lower than example 1, but not zero

Salary sacrifice can still be worthwhile for other reasons. Model the tax side on our salary sacrifice calculator, then come back here for the MLS layer.

Worked examples across the tiers

Medicare levy surcharge, FY2026-27. Single thresholds $105,000 / $123,000 / $164,000; family thresholds $210,000 / $246,000 / $328,000, each lifted $1,500 for every dependent child after the first.

Single on $110,000. Above the $105,000 first threshold and below $123,000, so Tier 1 at 1%. 1% × $110,000 = $1,100 for a full uncovered year.

The same person, uncovered for only 165 days. $1,100 × 165 ÷ 365 = $497.26. The calculator pro-rates on a 365-day year even in a leap year.

$100,000 taxable plus $12,000 reportable super contributions. Two different numbers do two different jobs here. The tier test uses $112,000, which lands in Tier 1. The surcharge itself is charged on taxable income plus reportable fringe benefits only, which is $100,000. So 1% × $100,000 = $1,000, not $1,120. That asymmetry is the most commonly missed rule in this calculation.

Family with three children. The family thresholds lift by $1,500 for each child after the first, so two extra children lift the first threshold from $210,000 to $213,000 and the second from $246,000 to $249,000. Combined income of $260,000 sits above $249,000 and below $331,000, so Tier 2 at 1.25% on the whole $260,000 = $3,250.

Methodology

income for MLS purposes = taxable income
                        + reportable fringe benefits
                        + reportable super contributions
                        + net investment losses
                        (+ spouse’s taxable income, if assessed as a family)

surcharge base          = taxable income + reportable fringe benefits
                          (reportable super and investment losses are NOT in the base)

thresholds              = the singles or family table, each lifted by $1,500
                          for every dependent child after the first

surcharge for the year  = surcharge base × the rate for that tier
amount payable          = surcharge for the year × days without cover ÷ 365

What we assume.

• Hospital cover, not extras. An extras-only policy does not exempt you.
• Pro-rata is calculated on a 365-day year, including in leap years.
• “Family” means you had a spouse for the full year, or dependent children. Part-year spouse situations are not modelled.
• The surcharge is in addition to the 2% Medicare levy, not instead of it.
• Estimate only.

What counts as “appropriate” hospital cover

According to privatehealth.gov.au, cover generally needs to be private patient hospital cover with a registered Australian health insurer. From 1 April 2019, the yearly excess usually cannot exceed $750 for singles or $1,500 for families/couples.

• Extras-only (general treatment) cover does not avoid MLS
• Overseas visitors / overseas student cover does not qualify
• Families above the family threshold generally need cover for the adult(s) and MLS dependents
• Part-year cover usually means a part-year exemption — you may still owe MLS for uncovered days
• Suspended cover (for example while travelling) usually does not count as covered days

How this calculator works

1. Build income for MLS purposes from taxable income + FBT + reportable super + net investment losses (and spouse amounts when family is selected).
2. Compare that total to the 2026-27 single or family thresholds (with child uplift) to pick the rate.
3. Apply the rate to the surcharge base (taxable + FBT only in this tool).
4. Prorate by days without cover ÷ 365.
5. If you enter a premium quote, compare it to the prorated MLS estimate — nothing more.

Frequently asked questions

Official references

• Medicare levy surcharge income thresholds and rates — ATO
• Medicare levy surcharge overview — ATO
• Medicare levy — ATO
• Medicare Levy Surcharge — privatehealth.gov.au

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