Medicare Levy Surcharge (MLS)
An additional 1%–1.5% surcharge on higher-income earners who don't hold private hospital insurance.
The Medicare Levy Surcharge (MLS) is an additional charge on top of the standard 2% Medicare levy, designed to encourage higher-income earners to take out private hospital insurance and reduce demand on the public health system. For 2025–26, MLS applies to singles with income above $93,000 and families above $186,000 (plus $1,500 per dependent child after the first).
The MLS rates are tiered: 1% for singles earning $93,001–$108,000 (families $186,001–$216,000), 1.25% for $108,001–$144,000 (families $216,001–$288,000), and 1.5% for income above $144,000 (families above $288,000). MLS income includes taxable income plus reportable fringe benefits, reportable super contributions, and net investment losses — it's a broader measure than taxable income alone.
You can avoid the MLS entirely by holding an eligible private hospital insurance policy (not just extras cover) with a permitted excess/co-payment of no more than $750 for singles or $1,500 for families. For most people above the threshold, the cost of private hospital insurance is less than the MLS — so the surcharge effectively creates a financial incentive to get private cover.