Medicare levy calculator — Australia
The 2% Medicare levy, the surcharge you pay without private hospital cover, and which tier your income lands in.
Covers 2026–27 income year · rates as at 2026-07-01
Medicare levy and surcharge
Estimate$3,900.00
Tier 2: a 1.25% surcharge on top of the 2% levy
- Medicare levy
- $2,400.00
- Surcharge
- $1,500.00
- Combined rate
- 3.25%
| Taxable income | $120,000 |
|---|---|
| Medicare levy (2%) | -$2,400.00 |
| Surcharge (1.25%) | -$1,500.00 |
| Total | -$3,900.00 |
- A basic hospital policy usually costs less than the 1,500 surcharge at this income.
On $120,000 without hospital cover the levy is $2,400 and the Tier 1 surcharge adds $1,200 on top.
Do you qualify
How this is calculated
The levy shades in
Below $27,222 there is no levy. Between $27,222 and $34,027 it is 10% of the excess over the lower threshold, not the full 2%. Above that, 2% applies to the whole taxable income.
levy = income ≤ upper ? (income − lower) × 10% : income × 2%The surcharge is separate and tiered
Without an appropriate hospital policy, incomes above $101,000 single or $202,000 family pay an extra 1% to 1.5% on top of the levy. The family threshold rises $1,500 for each dependent child after the first.
Income for surcharge purposes is broader
The surcharge test adds reportable fringe benefits, reportable employer super contributions and net investment losses back onto taxable income. Sacrificing $12,000 into super cuts your income tax but leaves the surcharge tier unchanged.
Worked example: $120,000 taxable income, no hospital cover
| Taxable income | $120,000 |
|---|---|
| Hospital cover | No |
| Assessed as | Single |
| Medicare levy | $2,400 |
|---|---|
| Surcharge (Tier 1) | $1,200 |
| Total | $3,600 |
A basic hospital policy at this income typically costs less than the $1,200 surcharge, which is the entire design of the policy.
What this assumes
- Full-year Australian tax resident.
- No Medicare levy exemption or reduction claimed.
- Hospital cover, if held, applies for the full year.
- Income for surcharge purposes equals taxable income.
Where this commonly goes wrong
- Extras-only cover does not exempt you. Only an appropriate hospital policy with an excess at or below the ATO limit removes the surcharge.
- Salary sacrifice reduces taxable income but reportable employer super contributions are added back for the surcharge test, so it may not move you down a tier.
- Holding cover for part of the year gives partial relief only — the surcharge applies for the days you were uncovered.
Questions
How much is the Medicare levy?
Two percent of taxable income once you are above the shade-in band. Below $27,222 there is none, and between there and $34,027 it is charged at 10% of the amount over the lower threshold rather than the full 2%.
What is the Medicare levy surcharge?
An extra 1% to 1.5% charged to people above the income thresholds who do not hold private hospital cover. It is separate from the 2% levy and is designed to make a basic policy the cheaper option.
Is private hospital cover worth it just to avoid the surcharge?
At the Tier 1 threshold the surcharge is around $1,010 a year for a single person, and basic hospital policies often cost less. Above Tier 2 the arithmetic favours cover more strongly still.
Does extras cover count?
No. Only an appropriate hospital policy exempts you, and it must have an excess at or below the ATO limit. Extras-only policies covering dental and optical leave the surcharge in place.
What income is the surcharge based on?
A broader figure than taxable income: it adds reportable fringe benefits, reportable employer super contributions and net investment losses back in. That is why people are sometimes surprised to land a tier higher.
What if I only had cover for part of the year?
The surcharge is charged for the days you were not covered. Taking out a policy in March does not undo the surcharge for July to February, so mid-year purchases give partial relief only.
Related tools
Sources
General estimate based on published ATO rates for the 2026–27 income year. Not tax advice, and it does not consider your objectives, financial situation or needs. Confirm your position with the ATO or a registered tax agent.
T1