Medicare Levy Surcharge 2025–26: Rates, Thresholds & How to Avoid It
The Medicare Levy Surcharge (MLS) is the government's nudge to take out private hospital cover. If you earn above the threshold and go without, you pay an extra tax — and above a certain income, a basic policy is often cheaper than the surcharge itself. Here's exactly how it works.
It's separate from the 2% Medicare levy
Almost everyone pays the 2% Medicare levy. The Medicare Levy Surcharge is a separate, additional 1%–1.5% charged only to higher earners who don't hold private hospital cover.
2025–26 rates and thresholds
| Income (single / family) | Surcharge |
|---|---|
| Up to $97,000 / $194,000 | 0% |
| $97,001–$113,000 / $194,001–$226,000 | 1% |
| $113,001–$151,000 / $226,001–$302,000 | 1.25% |
| Above $151,000 / $302,000 | 1.5% |
Family thresholds add $1,500 per dependent child after the first. "Income for surcharge purposes" is broader than taxable income — it adds back reportable fringe benefits, super contributions and investment losses.
Worked examples
- Single on $120,000, no cover: 1.25% × $120,000 = $1,500 surcharge. Basic hospital cover often costs about the same — so cover is roughly free after tax, and you actually get something for it.
- Single on $200,000, no cover: 1.5% × $200,000 = $3,000 surcharge. Well above most basic premiums — cover almost always wins here.
- Single on $90,000: below the threshold — $0 surcharge. Cover is optional on tax grounds.
The catch: only an appropriate level of hospital cover counts — "extras"/ancillary-only policies don't exempt you. And it's pro-rated: you need cover for the days you're above the threshold, not just on 30 June.
See your surcharge and rebate instantly
Enter your income, age and premium — our calculator shows the surcharge you'd pay and whether cover (after the rebate) beats it.
Try the Rebate & Surcharge Calculator →Frequently asked questions
What are the MLS rates for 2025–26?
0% up to $97k (single), then 1%, 1.25% and 1.5% — on top of the standard 2% Medicare levy.
How do I avoid it?
Hold appropriate private hospital cover for the full year (extras-only doesn't count).
Is it the same as the Medicare levy?
No — the 2% levy is near-universal; the surcharge is an extra charge for higher earners without cover.
Sources
- ATO — Medicare Levy Surcharge income thresholds and rates (2025–26)
- PrivateHealth.gov.au — surcharges and incentives
Figures as of June 2026 (2025–26 thresholds). Verify on ato.gov.au. This is general information, not financial or health advice (ASIC RG 244). See also our private health rebate guide.