What is the Medicare levy?
An extra 2% of your income for Medicare, plus a further charge on higher earners who do not have private hospital cover.
Above the surcharge line, without cover that meets the test, the surcharge applies to your whole income, not just the part over it.
The rule
- The Medicare levy is 2% of taxable income. It helps fund some of the costs of the public health system (ATO, 30 April 2026).
- Low income reduction, 2025-26 thresholds: no levy at $28,011 or less, then 10c of levy for each $1 over that until it reaches the full 2%, at $35,013. For people entitled to the seniors and pensioners tax offset the figures are $44,268 and $55,335. The ATO had not published 2026-27 figures when this was checked.
- The surcharge applies to people without appropriate private patient hospital cover whose income for surcharge purposes is over the line. 2026-27, single: $105,000 or less, nil. $105,001 to $123,000, 1%. $123,001 to $164,000, 1.25%. Over $164,000, 1.5%.
- 2026-27, families: $210,000 or less, nil. Then 1%, 1.25% and 1.5% at $246,000 and $328,000. The family lines go up $1,500 for each dependent child after the first.
- The surcharge is worked on the whole income for surcharge purposes. The ATO's example: income of $117,000 is tier 1, so the surcharge is 1% of $117,000, which is $1,170.
- Income for surcharge purposes is taxable income plus reportable fringe benefits, total net investment losses and reportable super contributions, plus a partner's if there is one.
- A change to the private health insurance rebate from 1 April 2027 is in a Bill introduced on 15 October 2026. It has not passed.
What people ask
Why is the Medicare levy so high?
The rate is set by law at 2% of taxable income. The ATO says the levy helps fund some of the costs of the public health system. People on low incomes pay less, or nothing.
How much is the Medicare levy surcharge?
In 2026-27 a single person without qualifying hospital cover pays 1% above $105,000, 1.25% above $123,000 and 1.5% above $164,000 of income for surcharge purposes. The family lines are $210,000, $246,000 and $328,000.
Is the Medicare levy surcharge on all my income?
Yes. Once income for surcharge purposes passes the first line, the surcharge rate applies to the whole of it, not only the part over the line. That is why one dollar over $105,000 adds about $1,050.
Who has to pay the Medicare levy surcharge?
The rule is that it applies to people who do not have appropriate private patient hospital cover for the whole year and whose income for surcharge purposes is over the line for their situation. Some people are exempt from the levy for other reasons. The ATO decides each case.
What counts as income for the surcharge?
Taxable income, reportable fringe benefits, total net investment losses (including rental losses) and reportable super contributions, plus your partner's if you have one.