Medicare Levy Surcharge Thresholds and Rates 2026-27
Your tier is set by your income for MLS purposes: your own if you’re single, or you and your spouse’s combined if you have a family. These are the ATO’s 2026-27 figures.
| Tier | Singles | Families | MLS rate |
|---|---|---|---|
| Base tier | $105,000 or less | $210,000 or less | 0% |
| Tier 1 | $105,001 – $123,000 | $210,001 – $246,000 | 1% |
| Tier 2 | $123,001 – $164,000 | $246,001 – $328,000 | 1.25% |
| Tier 3 | $164,001 or more | $328,001 or more | 1.5% |
ATO, Medicare levy surcharge income, thresholds and rates, last updated 22 June 2026.
Families get $1,500 more for each dependent child after the first, and every family boundary moves by the same amount. The surcharge-free family threshold is $210,000 with one child, $211,500 with two, $213,000 with three and $214,500 with four. Single parents use the family thresholds.
Income for MLS Purposes, and What the Rate Is Charged On
Income for MLS purposes is wider than taxable income. It’s the total of:
- Taxable income (including any amount on which family trust distribution tax was paid)
- Reportable fringe benefits, e.g. from a novated lease
- Total net investment losses: net rental property losses plus net financial investment losses
- Reportable super contributions: salary sacrifice plus personal contributions you claim a deduction for
Two different amounts. The four items above decide your tier. The ATO then charges the rate only on your taxable income plus reportable fringe benefits (and any family trust distribution tax amount). Investment losses and super contributions can push you into a tier, but they aren’t charged.
That’s why negative gearing and salary sacrifice don’t get you under the threshold. Someone who sacrifices $8,000 from a $110,000 salary has taxable income of $102,000 but income for MLS purposes of $110,000. That’s Tier 1, and the surcharge is 1% of $102,000: $1,020. Model the sacrifice itself with the salary sacrifice calculator.
Worked Example: the ATO’s “Tom”
Tom is 35, single, has no private patient hospital cover, taxable income of $90,000 and reportable fringe benefits of $27,000.
| Income for MLS purposes ($90,000 + $27,000) | $117,000 |
| Tier (single) | Tier 1, 1% |
| Medicare levy surcharge ($117,000 × 1%) | $1,170 |
ATO QC49961 example, 2026-27. Our calculator reproduces it exactly.
That’s on top of his 2% Medicare levy. With taxable income of $90,000 alone, Tom would have been under the $105,000 threshold. The fringe benefits are what put him in Tier 1.
Medicare Levy Surcharge by Income (Singles)
Full year, no hospital cover, no fringe benefits, investment losses or reportable super. Note the cliff at each boundary: crossing into a tier applies the rate to the whole income, not just the excess.
| Taxable income | MLS rate | Surcharge | Per fortnight |
|---|---|---|---|
| $100,000 | 0% | $0 | $0.00 |
| $105,000 | 0% | $0 | $0.00 |
| $110,000 | 1% | $1,100 | $42.31 |
| $123,000 | 1% | $1,230 | $47.31 |
| $130,000 | 1.25% | $1,625 | $62.50 |
| $150,000 | 1.25% | $1,875 | $72.12 |
| $164,000 | 1.25% | $2,050 | $78.85 |
| $180,000 | 1.5% | $2,700 | $103.85 |
| $200,000 | 1.5% | $3,000 | $115.38 |
Is Private Hospital Cover Cheaper Than the Surcharge?
It depends on the premium you’re quoted, and the government private health insurance rebate works against you as income rises: it runs on the same tiers, and shrinks as the surcharge grows. From 1 July 2026 to 31 March 2027:
| Oldest on policy | Base tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Under 65 | 24.118% | 16.079% | 8.038% | 0.000% |
| 65 – 69 | 28.139% | 20.098% | 12.058% | 0.000% |
| 70 and over | 32.158% | 24.118% | 16.079% | 0.000% |
ATO, Income thresholds and rates for the private health insurance rebate. Rates from 1 April 2027 are due in March 2027.
A simple way to decide: the break-even premium is the surcharge divided by the share of the premium you pay after the rebate. If your quote, before the rebate, is under that figure, the cover costs less than the surcharge.
| Single, taxable income | Surcharge | Rebate (under 65) | Cover is cheaper if the premium is under |
|---|---|---|---|
| $110,000 | $1,100 | 16.079% | $1,311 a year |
| $130,000 | $1,625 | 8.038% | $1,767 a year |
| $170,000 | $2,550 | 0.000% | $2,550 a year |
Cost only. It ignores what the policy actually covers, any lifetime health cover loading, and the rebate change on 1 April 2027. Use the calculator above with your own quote.
For the wider decision, including extras and when cover is worth it below the threshold, see private health insurance and Medicare.
What Cover Avoids the Surcharge
- Private patient hospital cover from a registered Australian health insurer, for hospital treatment in an Australian hospital or day hospital.
- An excess no higher than $750 for singles, or $1,500 for couples and families.
- Everyone covered. A family avoids the surcharge only if you, your spouse and your dependent children all have appropriate cover.
- Doesn’t count: extras-only (general) cover, travel insurance, and cover from an overseas fund.
The surcharge applies day by day. Cover that starts part-way through the year leaves you liable for the uncovered days, and cancelling cover while you travel overseas can make you liable too.
Families, Spouses and Dependants
For the surcharge you’re in a family if, for any part of the year, you had a spouse or a dependent child who was an Australian resident and you contributed to their maintenance. A spouse includes a de facto partner of any sex. A child is a dependant if they’re under 21, or 21 to 24 and studying full time. Foster children don’t count.
Family income decides the tier, but each of you pays the surcharge on your own taxable income and fringe benefits. A spouse with a very low income may not pay it at all: in 2025-26 the ATO’s figure was $27,222 or less of their own income for MLS purposes. The 2026-27 figure isn’t published yet.
If you partnered up or separated during the year, the single threshold applies to the days you were single and the family threshold to the days you had a spouse or dependants.
The Surcharge vs the Medicare Levy
They’re separate charges. The 2% Medicare levy is paid by almost every resident, has low-income and family reductions, and is included in the tax your employer withholds. The surcharge is extra, applies only above the thresholds on this page, can be removed entirely by hospital cover, and isn’t withheld from your pay. The ATO adds it when you lodge, and your notice of assessment shows the two together as “Medicare levy and surcharge”.
Related Calculators and Guides
- Medicare Levy Calculator: the 2% levy with the low-income, family and seniors thresholds
- Private Health Insurance and Medicare: the bigger cover decision
- Salary Sacrifice Calculator: why sacrificing doesn’t move your MLS tier
- Take-Home Pay Calculator: your pay after tax and the levy
Frequently Asked Questions
Medicare levy surcharge questions and answers
What is the Medicare levy surcharge threshold for 2026-27?
$105,000 for singles and $210,000 for families, with the family threshold rising $1,500 for each dependent child after the first. At or under the threshold no surcharge applies. Above it, the rate is 1% (singles to $123,000), 1.25% (to $164,000) or 1.5% ($164,001 and over) if you don't hold private patient hospital cover.
How is the Medicare levy surcharge calculated?
Add up your income for MLS purposes (taxable income, reportable fringe benefits, net investment losses and reportable super contributions) to find your tier. Then multiply your taxable income plus reportable fringe benefits by the tier's rate. It's charged on the whole amount, not just the part over the threshold, and only for the days you had no appropriate hospital cover.
Does salary sacrifice get me under the Medicare levy surcharge threshold?
No. Salary sacrifice is a reportable super contribution, and it's added back into income for MLS purposes. Someone on $110,000 who sacrifices $8,000 has taxable income of $102,000 but income for MLS purposes of $110,000, so they're still in Tier 1. Because the rate is charged only on taxable income plus fringe benefits, the surcharge is $1,020 rather than $1,100.
Is the Medicare levy surcharge the same as the Medicare levy?
No. The Medicare levy is 2% of taxable income and almost every resident pays it, cover or not. The surcharge is an extra 1% to 1.5% that applies only above the threshold and only without private patient hospital cover. You can pay both at once.
What hospital cover avoids the Medicare levy surcharge?
Private patient hospital cover from a registered Australian health insurer, with an excess of $750 or less for singles or $1,500 or less for couples and families. Extras-only cover, travel insurance and cover from an overseas fund don't count. Families need everyone covered: you, your spouse and your dependent children.
Is it cheaper to get private health insurance or pay the surcharge?
It depends on your income and the premium you're quoted. The surcharge is charged on your whole taxable income, so it grows as you earn more, while the government rebate on your premium shrinks as you move up the same tiers. Use the calculator to compare your quote after the rebate against the surcharge you'd pay.
Do I pay the surcharge if I had cover for only part of the year?
Only for the days without appropriate cover. If you took out a policy in October, you pay the surcharge for July to September. The surcharge is worked out when you lodge your return.
Is the Medicare levy surcharge taken out of my pay?
No. The ATO says the surcharge isn't covered by tax your employer withholds. It's added to your assessment when you lodge, so it reduces your refund or becomes a bill. It shows on your notice of assessment combined with the levy as 'Medicare levy and surcharge'.
How this calculator works▼
The tier is set by income for MLS purposes (taxable income, reportable fringe benefits, total net investment losses and reportable super contributions), combined with your spouse’s where you have one, against the ATO’s 2026-27 thresholds, with $1,500 added for each dependent child after the first. The tier rate is charged on your own taxable income plus reportable fringe benefits, then multiplied by the share of the 365-day year you had no appropriate cover. The ATO’s worked example (Tom, $1,170) is pinned in automated tests.
It doesn’t model family trust distribution tax amounts, exempt foreign employment income, a change of family status part-way through the year, or the low-income spouse exception, because its 2026-27 figure is unpublished. General information, not tax advice.
Sources & References
- 1Medicare levy surcharge income, thresholds and rates (QC49961)— Australian Taxation Office
- 2Paying the Medicare levy surcharge (QC71227)— Australian Taxation Office
- 3Appropriate level of private patient hospital cover (QC71224)— Australian Taxation Office
- 4Family and dependants for MLS purposes (QC27044)— Australian Taxation Office
- 5Income thresholds and rates for the private health insurance rebate— Australian Taxation Office
Last verified: 23 September 2026. Our content is based on the latest information from official Australian government sources.
Anita Bell
AuthorFounder & Senior Bookkeeper
Accountancy degree (2015); certified in Xero, QuickBooks Online, MYOB, Saasu, Zoho and Reckon One
Anita Bell earned her accountancy degree in 2015 and has worked as a senior bookkeeper with Prime Bookkeeping for over 5 years. This built her skills in Australian and New Zealand tax legislation and industry regulations. She is certified in Xero, QuickBooks Online, MYOB, Saasu, Zoho and Reckon One, and works with payroll and rostering software including Gusto, Deputy, Tsheets and KeyPay. She has strong experience in hospitality, building and construction, financial services, real estate, ecommerce, and medical and health services.
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