Medicare Levy Surcharge Calculator (FY2025-26)
Work out exactly how much Medicare Levy Surcharge you owe under the FY2025-26 thresholds. The calculator uses your income for MLS purposes, family status and how many months you held private hospital cover, then shows whether buying basic hospital insurance would actually save you money.
About this calculator
The Medicare Levy Surcharge (MLS) is an extra tax of 1.0%, 1.25% or 1.5% applied to Australian residents who earn above a threshold and do not hold an appropriate level of private hospital cover. It is separate from the standard 2% Medicare Levy and is designed to reduce pressure on the public hospital system by encouraging higher earners to take out private cover. The surcharge is assessed automatically when you lodge through myTax, and any payment is added to your tax bill rather than charged separately.
From 1 July 2025 the singles threshold rose to $101,000 and the family base threshold to $202,000, with the family figure increasing by $1,500 for each dependent child after the first. Your income for MLS purposes is wider than taxable income — it includes reportable fringe benefits, reportable super contributions, net investment losses and any exempt foreign employment income, so a salary that looks under the threshold can still trigger the surcharge. Couples are assessed as a family unit and combine their income, even if only one partner has cover.
Only an appropriate level of private hospital cover exempts you. Extras-only policies, ambulance cover and overseas health insurance do not count, and the policy must have an excess no greater than $750 single or $1,500 family. The surcharge applies for any day you were uncovered, calculated on a daily basis, so a partial year of cover gives you a partial exemption. This calculator handles all of that and tells you whether the cheapest qualifying hospital policy would actually cost less than the MLS you would otherwise pay.
How to use
- 1Enter your income for MLS purposes (taxable income plus reportable fringe benefits, reportable super, net investment loss and exempt foreign employment income).
- 2Choose single or family and add the number of dependent children if applicable — the family threshold lifts by $1,500 per child after the first.
- 3Tell us whether you held appropriate private hospital cover and how many of the 12 months you were covered.
- 4We apply the FY2025-26 tiered rates (1.0% / 1.25% / 1.5%) only to the days you were uncovered.
- 5Compare the resulting MLS amount against typical basic hospital premiums to see your break-even point.
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Frequently asked questions
What income figure does the MLS use?
The MLS uses a broader income definition than your taxable income. It adds together your taxable income, reportable fringe benefits, reportable employer super contributions, net investment loss (rental and financial) and exempt foreign employment income. This means a salary sacrifice arrangement that lowers your taxable income may still leave you above the MLS threshold once everything is added back. The calculator asks for each component separately so the result matches what the ATO will assess at lodgement.
Does extras-only health insurance exempt me from MLS?
No. Only an appropriate level of private hospital cover exempts you from the Medicare Levy Surcharge. Extras policies covering dental, optical and physio do not qualify, and neither does ambulance cover or overseas student health cover on its own. The hospital policy must also have an excess of $750 or less for singles and $1,500 or less for families. If you only hold extras, the calculator treats you as uncovered for the entire period and applies the surcharge to your full income for MLS purposes.
What are the FY2025-26 MLS thresholds?
For singles: no MLS up to $101,000, then 1.0% from $101,001 to $118,000, 1.25% from $118,001 to $158,000 and 1.5% above $158,000. For families the base threshold is $202,000 (double the singles figure) and rises by $1,500 for every dependent child after the first. The same three tiers apply, just at the doubled income points. These thresholds were lifted from 1 July 2025 — earlier financial years used lower numbers, so always check the year you are calculating.
How is the surcharge calculated if I had cover for part of the year?
The MLS is pro-rated by the number of days you were not covered by an appropriate hospital policy. If you held cover for 8 of the 12 months, the surcharge applies to the remaining 4 months only, using your full annual income for MLS purposes. The calculator multiplies the annual surcharge that would otherwise apply by the uncovered days divided by 365. This is why even a few months of cover starting partway through the year can meaningfully reduce the bill.
Is buying private hospital cover cheaper than paying the surcharge?
Often yes, especially in the higher tiers. A basic hospital policy typically costs between $1,200 and $1,800 a year for a single, while the surcharge at the top tier on a $158,001+ income is at least $2,265 a year and rises with income. The calculator shows your break-even point so you can compare. Keep in mind that hospital cover also gives you actual healthcare benefits and avoids Lifetime Health Cover loading if you take it out before age 31, so the total value can exceed the tax saving.
Authoritative sources
All rates and thresholds used in this calculator are sourced from the Australian Taxation Office (ATO).
Want a full refund estimate?
Our main refund calculator combines all these rules — enter your salary and deductions for a full annual refund estimate.
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