Medicare Levy Surcharge Calculator

The Medicare Levy Surcharge Calculator estimates the extra tax an Australian resident pays for not holding appropriate private hospital cover once income passes the MLS thresholds. Enter income for surcharge purposes, family status, dependents, the financial year, and how many days of the year you went without complying hospital cover.

How It Works

Income for MLS purposes is broader than taxable salary: the calculator adds reportable fringe benefits, reportable super contributions, and net investment losses back to income. That MLS income is tested against the year's thresholds for your status. Singles use the base thresholds directly; the family base is double the single base, plus $1,500 for each dependent child after the first. Crossing the base puts you in Tier 1 at 1.0%, then Tier 2 at 1.25%, then Tier 3 at 1.5%, and the surcharge applies pro rata for the days without cover:

$\text{Surcharge}=\text{MLS income}\times\text{Tier rate}\times\frac{\text{Days without cover}}{\text{Days in year}}$

Thresholds used by the calculator (singles)

| Financial year | Base | Tier 1 up to | Tier 2 up to | |---|---|---|---| | 2023-24 | $93,000 |$108,000 | $144,000 | | 2024-25 |$97,000 | $113,000 |$151,000 | | 2025-26 | $101,000 |$118,000 | $158,000 | | 2026-27 |$105,000 | $123,000 |$164,000 |

Above the Tier 2 limit, Tier 3 applies at 1.5%. Rates are 0% in the base tier, then 1.0%, 1.25%, and 1.5%.

Parameters

| Input | Required | Meaning | |---|---|---| | Income | Yes | Income for MLS purposes before add-backs | | Reportable fringe benefits | No | Added to MLS income | | Reportable super contributions | No | Salary-sacrifice and similar amounts, added back | | Net investment loss | No | Added back to MLS income | | Status | Yes | Single or family | | Dependents | No | Dependent children; raises the family base after the first | | Days without cover | No | Days in the year without complying hospital cover (default 365) | | Financial year | No | 2023-24 through 2026-27 threshold tables |

Worked example

A single taxpayer in 2025-26 has MLS income of $110,000 and no hospital cover all year. The 2025-26 single base is$101,000 and Tier 1 runs to $118,000, so the rate is 1.0$1,100. If they held complying cover for all but 100 days, the surcharge falls to 110,000 x 1% x 100/365 = $301.37. That pro rata property is why taking out cover mid-year still saves money, and why the cheapest complying hospital policy is often compared against roughly the Tier 1 figure when people weigh "junk cover" purely as a tax decision.

MLS is not the Medicare levy

The standard Medicare levy (generally 2% of taxable income) applies to most residents regardless of insurance. The surcharge is an additional amount on top, aimed at higher-income earners without private hospital cover, and holding complying hospital cover removes the surcharge, not the levy. Extras (ancillary) cover alone does not count: the policy must be hospital cover with an excess within the allowed limits. Lifetime Health Cover loading is a separate premium loading for taking out hospital cover after age 31 and is not part of this calculation.

Limitations

This is a planning estimate using the threshold tables stored in the calculator. It does not determine your exact MLS income (the ATO definition includes further items and adjustments), does not assess whether a specific policy is complying cover, and does not replace the ATO's calculation on assessment. Verify the current year's thresholds and your policy status before relying on the figure.

Worked example 2: a family just over the line

A couple with two dependent children in 2025-26 has combined MLS income of $210,000 and no hospital cover. The family base threshold is double the single base,$202,000, plus $1,500 for the second dependent child, giving$203,500. Their income exceeds the base but stays under the family Tier 1 limit of $220,500 (the base plus the single Tier 1 band width of$17,000), so the Tier 1 rate of 1.0% applies and a full year without cover costs about $2,100. One parent's salary-sacrifice super contributions are included in that$210,000 even though they reduced taxable income, which is the add-back surprise that catches many families the first year they cross the threshold.

Timing decisions the estimate informs

Because the surcharge is pro-rated daily, the decision is rarely all-or-nothing: taking complying cover from the start of the financial year eliminates the charge entirely, and starting mid-year caps it at the uncovered stretch. Compare the cheapest complying hospital premium for your tier position against the estimate: for a Tier 1 single, the surcharge is 1% of MLS income, so at $110,000 the$1,100 figure is the budget a policy must beat to pay for itself on tax grounds alone, before counting any value you place on private cover itself.

Frequently Asked Questions

Does extras cover avoid the surcharge?

No. Only complying private hospital cover counts. A policy that is extras-only leaves you exposed to MLS for every day you hold it.

Why is my income for MLS higher than my salary?

The definition adds back reportable fringe benefits, reportable super contributions, and net investment losses. Salary sacrificing into super, a common way to cut taxable income, does not reduce income for MLS purposes.

If I buy hospital cover mid-year, do I still owe MLS?

Only for the days without cover. The surcharge is pro-rated by days, so cover from 1 January roughly halves a full-year liability in a typical case.