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 2026–27, MLS applies to singles with income above $105,000 and families above $210,000 (plus $1,500 per dependent child after the first).
The MLS rates are tiered: 1% for singles earning $105,001–$123,000 (families $210,001–$246,000), 1.25% for $123,001–$164,000 (families $246,001–$328,000), and 1.5% for income above $164,000 (families above $328,000). 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.
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Medicare Levy
A 2% levy on taxable income to help fund Australia's public healthcare system, Medicare.
Private Health Insurance Rebate
A government rebate that reduces the cost of private health insurance premiums, means-tested based on income and age.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Salary Sacrifice
An arrangement where you direct part of your pre-tax salary into super (or other benefits), reducing your taxable income.