What is the Medicare Levy Surcharge (MLS)?

The Medicare Levy Surcharge is an additional tax of between 1% and 1.5% of your Medicare levy surcharge income that applies to Australian taxpayers who earn above certain income thresholds and do not hold an appropriate level of private hospital cover. It is designed to encourage higher-income earners to take out private hospital insurance and reduce pressure on the public system.

Who has to pay the Medicare Levy Surcharge?

You may have to pay the Medicare Levy Surcharge if you are an Australian tax resident, your MLS income is above the relevant single or family threshold, and you and your dependants do not hold an appropriate level of private hospital cover for the full year. The surcharge is calculated separately from the standard 2% Medicare levy.

What income is used for the Medicare Levy Surcharge?

For MLS purposes the ATO uses Medicare levy surcharge income, which is generally your taxable income plus reportable fringe benefits, total net investment losses, reportable super contributions and some foreign employment income. This figure can be higher than your taxable income shown on your PAYG summary.

What are the current Medicare Levy Surcharge income thresholds and rates?

For recent income years, singles with MLS income at or below the base threshold pay no surcharge. Above that, three tiers apply with rates of 1.0%, 1.25% and 1.5% of MLS income. Family thresholds are roughly double the single thresholds and increase further for each dependent child after the first. Always check the latest ATO guidance for the exact dollar amounts for the year you are lodging.

How can private health insurance reduce my Medicare Levy Surcharge?

If you and all your dependants hold an appropriate level of private hospital cover for the full financial year, you generally do not pay the Medicare Levy Surcharge even if your income is above the thresholds. The policy must be a complying health insurance policy with hospital cover, not extras-only cover.

Medicare Levy Surcharge Calculator (Australia)

Estimate your Medicare Levy Surcharge (MLS) based on your income, family status and private hospital cover. Uses the standard Australian MLS tiers and thresholds so you can compare the cost of paying the surcharge versus taking out private health insurance.

For Australian tax residents only. This tool is a general guide and does not replace advice from the ATO or a registered tax agent.

Medicare Levy Surcharge estimator

MLS income for the year (AUD)

Use your Medicare levy surcharge income (taxable income plus reportable fringe benefits, reportable super contributions, net investment losses, etc.).

Family status

Single Family / Couple / Single parent

For MLS, “family” includes couples and single parents with dependent children.

Private hospital cover

Appropriate cover for full year No appropriate cover Covered for part of the year

“Appropriate cover” generally means a complying private hospital policy (not extras-only).

Estimated MLS result

Enter your details and click “Calculate” to see your estimated surcharge.

Income tier

–

Surcharge rate

Days without cover

Pro‑rated factor

0.00

Estimated MLS payable $0

This is a simplified estimate based on standard MLS tiers. Your actual liability is calculated by the ATO when you lodge your tax return.

Tip: Compare with private cover

If your estimated MLS is higher than the annual cost of an eligible hospital policy, taking out private cover may reduce your tax and give you extra benefits. Always check policy details and waiting periods.

Medicare Levy Surcharge income thresholds & rates

The MLS uses income tiers that differ for singles and families. Family thresholds are higher and increase for each dependent child after the first.

Tier	Singles – MLS income	Families – MLS income*	MLS rate

*Family thresholds generally apply to couples and single parents. The base family threshold increases for each dependent child after the first. Always confirm the exact dollar amounts and rules for the income year you are lodging on the ATO website.

What is the Medicare Levy Surcharge?

The Medicare Levy Surcharge (MLS) is an additional tax that applies to some Australian taxpayers who:

are Australian tax residents, and
have Medicare levy surcharge income above the relevant single or family threshold, and
do not hold an appropriate level of private hospital cover for themselves and their dependants.

The surcharge is designed to encourage higher‑income earners to take out private hospital insurance and reduce pressure on the public hospital system. It is separate from the standard 2% Medicare levy.

How the calculator works

This calculator follows the same structure as the ATO’s guidance, but in a simplified way so you can quickly estimate your MLS and compare it with the cost of private health insurance.

1. Determine your MLS income

For MLS purposes, the ATO uses Medicare levy surcharge income, which is usually higher than just your taxable income. It generally includes:

taxable income
reportable fringe benefits
total net investment losses
reportable super contributions
some foreign employment income.

You can find this figure on your tax return or by using your income statements and payment summaries.

2. Apply the correct income tier

Once your MLS income is known, the calculator:

Checks whether you are assessed as a single or a family (including couples and single parents).
Applies the relevant base threshold for singles or families.
For families, increases the threshold for each dependent child after the first.
Assigns you to Tier 0 (no surcharge) or one of the three surcharge tiers.

Conceptual formula

MLS payable ≈ MLS income × MLS rate × (days without cover ÷ 365)

The ATO calculates the surcharge on a daily basis. This tool approximates that by using a simple pro‑rata factor based on days without appropriate cover.

3. Adjust for days without cover

If you had an appropriate level of private hospital cover for only part of the year, the surcharge is generally applied only for the days you were not covered. The calculator:

asks how many days you had cover,
calculates days without cover = 365 − days with cover, and
applies a pro‑rata factor to your MLS estimate.

Worked examples

Example 1 – Single without cover

Alex is a single Australian resident with MLS income of AUD 120,000 and no private hospital cover.

Family status: single
MLS income: $120,000
Income tier: above base threshold → Tier 1
MLS rate (example): 1.0%
Days without cover: 365

Estimated MLS ≈ $120,000 × 1.0% × (365 ÷ 365) = $1,200.

Example 2 – Family with partial cover

Priya and Sam are a couple with two dependent children. Their combined MLS income is $260,000. They took out appropriate private hospital cover halfway through the year (182 days).

Family status: family, 2 dependent children
MLS income: $260,000
Income tier: above family threshold → Tier 1
MLS rate (example): 1.0%
Days without cover: 365 − 182 = 183

Estimated MLS ≈ $260,000 × 1.0% × (183 ÷ 365) ≈ $1,304.

Frequently asked questions

Do I pay MLS if I already pay the 2% Medicare levy?

Possibly. The Medicare levy (usually 2% of taxable income) applies to most Australian residents. The Medicare Levy Surcharge is an extra amount on top of that if your income is above the thresholds and you don’t have appropriate private hospital cover.

What counts as an “appropriate level” of private hospital cover?

Generally, you must hold a complying private hospital insurance policy with a registered health fund. Extras‑only policies (e.g. dental, optical) do not satisfy the MLS rules. The policy must cover you and all your dependants for the period you want to avoid the surcharge.

How do dependent children affect the MLS?

For families, the base income threshold increases for each dependent child after the first. This means families with more children can earn a higher combined income before moving into a higher MLS tier. The calculator lets you specify the number of dependent children so the threshold can be adjusted.

Is this calculator official ATO guidance?

No. This is an independent educational tool that uses simplified assumptions based on publicly available ATO rules. It does not take into account every possible situation (for example, complex income types, part‑year residency or changes in family status). Always refer to the latest information on the ATO website or seek advice from a registered tax agent.

Key takeaways

The Medicare Levy Surcharge is an extra tax for higher‑income earners without private hospital cover.
It is based on MLS income, which can be higher than taxable income.
Singles and families have different thresholds, and family thresholds increase with more children.
Holding an appropriate private hospital policy for the full year usually means no MLS.
This calculator helps you estimate your MLS and compare it with the cost of private health insurance.

Disclaimer: This calculator is for general information only and does not constitute tax, financial or legal advice. Tax law and thresholds change over time. Always check the latest ATO guidance and consider speaking to a registered tax agent for personalised advice.