What is the Medicare levy surcharge in Australia 2026?
The Medicare Levy Surcharge (MLS) is an additional levy for higher-income earners in Australia who do not have appropriate private hospital insurance. It aims to encourage private health cover, reducing reliance on the public healthcare system. Thresholds are indexed annually.
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How it works in practice
Understanding the Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) is an additional levy that high-income earners pay if they do not have an appropriate level of private hospital insurance. It is charged on top of the standard 2% Medicare levy and is designed to encourage individuals to take out private health insurance, thereby reducing pressure on the public Medicare system.
How it Works
The MLS is applied to individuals, and families, once their income for MLS purposes exceeds certain thresholds. These thresholds are indexed annually, meaning the specific income levels for 2026 will be announced closer to that tax year. Generally, the surcharge is an additional 1%, 1.25%, or 1.5% of your income, depending on your income tier. For example, for the 2023–24 income year, the lowest threshold for singles was $93,000 and for families was $186,000, with higher income tiers attracting higher surcharge rates. Having eligible private hospital insurance for the full income year avoids the MLS.
Important exceptions
The MLS does not apply to all taxpayers. Individuals whose income for MLS purposes is below the lowest threshold (e.g., $93,000 for singles in 2023–24) are exempt. It also does not apply if you have appropriate private hospital insurance for the entire income year.
However, it's crucial that the private health insurance provides 'hospital cover' with an excess of no more than $750 for singles or $1,500 for families to qualify for the exemption. General treatment cover (ancillary or extras) alone does not exempt you from the MLS.
What you should do now
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Check your estimated income for the 2025-26 financial year to determine if you might exceed the Medicare Levy Surcharge thresholds.
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Research appropriate private hospital insurance policies that meet the ATO's requirements to avoid the surcharge.
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If considering private health insurance, compare different providers and policies to find one that suits your needs and budget.
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Consult a registered tax agent or financial advisor for personalised advice regarding your specific income and health insurance situation.
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Monitor official Australian Taxation Office (ATO) announcements for the confirmed Medicare Levy Surcharge thresholds for the 2026 income year.
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