Tax
Medicare Levy Explained
Short answer
The Medicare levy is 2% of taxable income for most Australian residents and helps fund the public health system. Low-income earners pay a reduced levy, phasing in between $28,011 and $35,013 for singles. The Medicare levy surcharge is a separate charge of 1% to 1.5% for singles above $105,000 without private hospital cover.
Levy vs surcharge
The levy (2%) applies to most residents. The surcharge (1%-1.5%) is additional and only applies to higher earners who do not hold adequate private hospital cover. They are two separate things often confused.
Low-income thresholds
If your income is below the low-income threshold, the levy is reduced or nil. Thresholds are higher for families and rise per dependent child. Foreign residents generally do not pay the levy.
Frequently asked questions
Who pays the Medicare levy?+
Most Australian resident taxpayers, at 2% of taxable income, with low-income reductions.
How do I avoid the surcharge?+
Hold appropriate private hospital cover for the full year if you are a higher earner.
Do foreign residents pay it?+
Generally no, as they are not entitled to Medicare.
Sources & methodology
- ATO - Personal income tax: new tax cuts (15% rate from 1 July 2026)
- Income Tax Rates Act 1986 (legislation.gov.au)
- ATO - Study and training loan repayment thresholds and rates
- ATO - Super guarantee
- ATO - Contribution caps
- ATO - Payday Super and the annual maximum contribution base
- ATO - Medicare levy
- ATO - Medicare levy surcharge income thresholds and rates
- Fair Work Ombudsman - Pay slips
- How we calculate these estimates
Last updated 13 August 2026. Figures use the 2026-27 financial year.
Related calculators & guides
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