1. Home
  2. »
  3. Individual Tax Rates (Resident)
  4. »
  5. Medicare Levy Surcharge

Medicare Levy Surcharge

The Medicare Levy Surcharge (“MLS”) applies when you don’t have sufficient private patient hospital health insurance cover, and your income exceeds the thresholds.

Medicare Levy Surcharge applies in addition to the basic Medicare Levy. the surcharge rate is determined by an income test.

“Income” for this purpose is Adjusted Taxable Income, for which see the formula below.

Levy Surcharge Income Thresholds For 2024-25

SinglesFamilies *Surcharge
$0 – $97,000$0 – $194,0000%
$97,001 – $113,000$194,001 – $226,0001%
$113,001 – $151,000$226,001 – $302,0001.25%
$151,001 and over$302,001 and over1.5%
Source: ATO

For 2023-24 the income test levels start with single incomes over $93,000 or family incomes over $186,000, determining a surcharge rate ranging from 1% to 1.5% of income.

The income levels and surcharge rates were unchanged in the tax years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, 2019-20, 2020-21, 2021-22 and 2022-23.

From 1 July 2023, indexation of the income levels recommenced.

Levy Surcharge Income Thresholds For 2023-24

SinglesFamilies *Surcharge
$0 – $93,000$0 – $186,0000%
$93,001 – $108,000$186,001 – $216,0001%
$108,001 – $144,000$216,001 – $288,0001.25%
$144,001 and over$288,001 and over1.5%

* Family income thresholds are increased by $1,500 for the second and subsequent dependent children.

Levy Surcharge Income Thresholds Increase in 2023-24

Levy Surcharge Income Thresholds For The Years 2020-21, 2021-22 and 2022-23

Income thresholds are subject to indexation and remain unchanged to 30 June 2023

SinglesFamilies *Surcharge
$0 – $90,000$0 – $180,0000%
$90,001 – $105,000$180,001 – $210,0001%
$105,001 – $140,000$210,001 – $280,0001.25%
$140,001 and over$280,001 and over1.5%

The income test currently applies in bands, which determine the percentage rate of MLS payable as set out in the tables below.

The surcharge is payable (by you and your spouse if any) for any part of the tax year that you and all dependants did not have private patient hospital cover and your income was in excess of the thresholds.

The necessary evidence is a statement from your health insurer showing the number of days you and your dependants had the relevant insurance cover.

Adjusted Taxable Income Formula

The measurement of income for determining the surcharge rate has a formula which includes taxable income and a number of other items. The formula for the inclusion of the value of fringe benefits in Adjusted Taxable Income was adjusted from 1 July 2017.

The meaning of ‘adjusted fringe benefits total’ was  modified so that the gross value rather than adjusted net value of reportable fringe benefits is used.

Income for medicare levy surcharge purposes

(and for Private Health Insurance Rebate entitlement purposes)

“Income” includes

the addition of:

  • taxable income including the net amount on which family trust distribution tax has been paid
  • total reportable fringe benefits, as reported on the payment summary
  • total net investment loss (includes both net financial investment loss and net rental property loss)
  • reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions)

Less: the taxed element of a superannuation lump sum, other than a death benefit, which is below the low rate cap.

How to avoid the medicare levy surcharge

If you are liable for the surcharge based on income, the medicare levy surcharge can be avoided by taking out a health insurance policy which has the approved level and type of insurance cover.

An eligible policy must be provided by a registered health insurer and provide hospital cover, or combined hospital and general cover.

It is important that the right kind of insurance cover is maintained. The Tax Office has determined that an overseas visitors health insurance policy held by a tax resident does not ordinarily provide sufficient private hospital cover to avoid the MLS. (See ATO ID 2011/21).

A  ‘dependant‘ of a taxpayer is an Australian resident (regardless of income) to whom the taxpayer provided maintenance and who is a spouse, a child under 21 years or from 21 to 24 years old if a full time student. Same sex relationships are included in the definitions.

Medicare Levy Surcharge % and Income Thresholds

Levy Surcharge Income Thresholds For the years 2014-15 to 2022-23.

For the years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19, 2019-20, 2020-21, 2021-22 and 2022-23.

Following passage of the Private Health Insurance Amendment Bills annual indexation of the income levels was frozen at 2014-15 levels for 3 years until 30 June 2018 and subsequently extended through to 2022-23.

Singles

IncomeSurcharge
$0 – $90,0000%
$90,001 – $105,0001%
$105,001 – $140,0001.25%
$140,001 and over1.5%

Families

IncomeSurcharge
$0 – $180,0000%
$180,001 – $210,0001%
$210,001 – $280,0001.25%
$280,001 and over1.5%

For families with children, the thresholds are increased by $1,500 for each child after the first. For example if you have two dependant children the family income threshold increases by $1,500, for 3 children by $3,000.

Annual indexation of income thresholds (on 1 July based on growth in Average Weekly Ordinary Time Earnings) is currently frozen until 30 June 2021.

Levy Surcharge Income Thresholds 2013-14

Singles

Income Surcharge
$0 – $88,0000%
$88,001 – $102,0001%
$102,001 – $136,0001.25%
$136,001 and over1.5%

Families

IncomeSurcharge
$0 – $176,0000%
$176,001 – $204,0001%
$204,001 – $272,0001.25%
$272,001 and over1.5%

For families with children, the thresholds are increased by $1,500 for each child after the first. So for example if you have two dependant children the family income threshold increases by $1,500, for 3 children by $3,000.

Levy Surcharge Income Thresholds 2012-13

Singles

Income Surcharge
$0 – $84,0000%
$84,001 – $97,0001%
$97,001 – $130,0001.25%
$130,001 and over1.5%

Families

IncomeSurcharge
$0 – $168,0000%
$168,001 – $194,0001%
$194,001 – $260,0001.25%
$260,001 and over1.5%

For families with children, the thresholds are increased by $1,500 for each child after the first. So for example if you have two dependant children the family income threshold increases by $1,500, for 3 children by $3,000.

Exemption: If the combined surcharge income of you and your spouse for MLS purposes is above the limit, but your own income for MLS purposes was $20,542 or less, then you don’t need to pay the surcharge. (However your spouse’s eligibility for this exemption is separately tested.)

Levy Surcharge Income Thresholds 2011-12

  • Singles Surcharge Threshold: $80,000
  • Family Surcharge Threshold: $160,000 (increasing by $1,500 for each dependant child after the first).

The Medicare Levy Surcharge of 1% is applicable when appropriate private health insurance cover is not maintained, and your surcharge income exceeds the thresholds.

Exemption: If the combined surcharge income of you and your spouse for MLS purposes is above the limit, but your own income for MLS purposes was $19,404 or less, then you don’t need to pay the surcharge. (However your spouse’s eligibility for this exemption is separately tested.)

Levy Surcharge Income Thresholds 2010-11

For the 2010-11 income tax year, the income thresholds for the Medicare levy surcharge of 1% of surcharge income were

  • Singles Surcharge Threshold: $77,000 per year
  • Family/Couples Surcharge Threshold: $154,000 per year (increasing by $1,500 for each dependant child after the first)

Exemption: If the combined income of you and your spouse for MLS purposes is above the limit, but your own income for MLS purposes was $18,839 or less, then you don’t need to pay the surcharge. (However your spouse’s eligibility for this exemption is separately tested.)

Levy Surcharge Income Thresholds From 1996-97 to 2009-10

Income thresholds for the Medicare levy surcharge of 1% of surcharge income were:

YearSingleFamily*
2009-10$73,000$146,000
2008-09$70,000$140,000
2007-08$50,000$100,000
2006-07$50,000$100,000
2005-06$50,000$100,000
2004-05$50,000$100,000
2003-04$50,000$100,000
2002-03$50,000$100,000
2001-02$50,000$100,000
2000-01$50,000$100,000
1999-00$50,000$100,000
1998-99$50,000$100,000
1997-98$50,000$100,000
1996-97$50,000$100,000

* Family surcharge income thresholds include 1 dependent child and is increased by $1,500 for each dependant child after the first. Indexation of the thresholds was introduced in 2008.

In 2008-09 only –  if adequate private patient hospital cover was held for any time in the period 1 July 2008 to 31 December 2008 and on 1 January 2009 then cover is deemed for the whole period 1 July 2008 to 31 December 2008.

The MLS was introduced on 1 July 1997 to encourage those on higher incomes to take out appropriate hospital insurance. For further historical information see Department of Health and Ageing “Post Implementation Review: Increase of the Income Tax Thresholds for the Medicare levy Surcharge”  (September 2011)

Further information

See also

This page was last modified on 2024-06-19