Medicare Levy 2026-27: Rate, Thresholds and Surcharge
Medicare levy rates 2026-27
| Taxable income | Medicare levy |
|---|---|
| Below $28,011 | Nil |
| $28,011 to $35,014 | Shade-in: 10c per dollar above threshold |
| Above approximately $35,014 | 2% of total taxable income |
The shade-in zone runs from $28,011 until the point where 2% of total income equals the cumulative shade-in amount, at approximately $35,014.
Medicare levy at key incomes
| Annual gross | Medicare levy | As % of gross |
|---|---|---|
| $40,000 | $800 | 2.00% |
| $60,000 | $1,200 | 2.00% |
| $80,000 | $1,600 | 2.00% |
| $100,000 | $2,000 | 2.00% |
| $150,000 | $3,000 | 2.00% |
Medicare Levy Surcharge (MLS)
The MLS is an additional levy charged to individuals whose income exceeds the MLS threshold and who do not hold an approved private hospital cover policy for the whole income year. It is on top of the standard 2% levy, not a replacement.
| Threshold tier | Single income | Surcharge rate |
|---|---|---|
| Base (no private hospital cover) | $93,000+ | 1% to 1.5% |
| Tier 1 | $93,001 to $108,000 | 1% |
| Tier 2 | $108,001 to $144,000 | 1.25% |
| Tier 3 | $144,001+ | 1.5% |
Family thresholds are higher (roughly double the single threshold plus $1,500 per dependent child). Check the ATO website for the current family threshold each year.
How to avoid the surcharge
Holding an approved hospital cover policy for the full income year eliminates the MLS. At the Tier 1 income level of around $93,000 the surcharge costs approximately $930 per year. A basic private hospital policy from a registered fund is often available for less than this, making cover the cheaper option at most income levels above the threshold.
How the levy appears on your payslip
Employers combine income tax and the Medicare levy into a single "tax withheld" figure using the ATO PAYG withholding tax tables (schedule 1). The Medicare levy component is embedded; there is typically no separate line for it on a payslip. The final amount is squared up at year-end on your tax return, where any difference between tax withheld and actual liability is refunded or billed.
Frequently asked questions
Do I pay Medicare levy on every dollar I earn?
Not always. If your taxable income is below the low-income threshold of $28,011 (2026-27) you pay no Medicare levy. Between $28,011 and $35,014 a shade-in applies: the levy increases at 10 cents per dollar of income above the threshold until the full 2% rate is reached. Above $35,014 the full 2% applies to your entire taxable income.
What is the Medicare Levy Surcharge?
The Medicare Levy Surcharge (MLS) is an additional 1% to 1.5% tax on top of the standard 2% Medicare levy, payable by high-income earners who do not hold an approved private hospital insurance policy. It kicks in above $93,000 for singles (2025-26 threshold; 2026-27 thresholds follow the same pattern). Taking out private hospital cover is usually cheaper than paying the surcharge above the Tier 1 level.
Can I be exempt from the Medicare levy?
Yes. Certain visa holders, foreign residents for tax purposes, and people who are not entitled to Medicare benefits (for example some temporary residents) are exempt from the Medicare levy. An exemption is claimed on the tax return or through a Medicare Levy Variation Declaration lodged with your employer.
Source: ATO Medicare levy 2026-27; MLS thresholds from ATO private health insurance rebate guidance (2025-26 thresholds used where 2026-27 not yet legislated). Last updated 2026-11-04.