The Medicare Levy in Australia Explained (FY 2025–26)
Last updated: June 2026
On top of income tax, most Australian residents pay the Medicare Levy, which helps fund the public health system. There is also a surcharge for higher earners who do not hold private hospital cover. Here is how both work for FY 2025–26.
The 2% Medicare Levy
The Medicare Levy is 2% of your taxable income for most residents. Low earners are exempt or pay a reduced rate — the levy phases in gradually once income passes the low-income threshold (around $29,207), reaching the full 2% at about $36,509.
The Medicare Levy Surcharge (MLS)
If you earn above $101,000 (single) and do not hold an appropriate level of private hospital cover, you pay the Medicare Levy Surcharge on top of the standard levy. It ranges from 1% to 1.5% depending on income. Taking out private hospital cover usually avoids it.
How it appears on your pay
The Medicare Levy is calculated as part of your annual tax assessment and is effectively bundled into the tax withheld from your pay. It is separate from the income tax brackets but is charged on the same taxable income.
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