Medicare Levy Surcharge Calculator + Break-even

What this calculator works out

This calculator estimates the Medicare Levy Surcharge (MLS) the Australian Taxation Office (ATO) would assess against you for the income year, based on your income for surcharge purposes, your filing situation (single or family), the dependent-child uplift to the family threshold, and the number of days you held an appropriate level of private patient hospital cover. It also runs a break-even comparison against the basic hospital cover premium you supply, so you can see whether buying the cheapest compliant policy would actually save you money.

The MLS is a separate, additional tax on top of the standard 2% Medicare Levy. It only applies to higher-income Australians who go without an appropriate level of private patient hospital cover for any part of the year. The whole point of the calculator is the comparison: at most income tiers above the singles or family threshold, the cheapest eligible hospital policy is cheaper than the surcharge — but not always, especially just over the Tier 1 threshold.

Where the formula comes from

The thresholds and rates used here are the ATO-published MLS income thresholds for the FY2025-26 income year:

Tier	Singles MLS income	Family MLS income (no kids)	Surcharge rate
Tier 0	$0 – $97,000	$0 – $194,000	0%
Tier 1	$97,001 – $113,000	$194,001 – $226,000	1.0%
Tier 2	$113,001 – $151,000	$226,001 – $302,000	1.25%
Tier 3	$151,001 +	$302,001 +	1.5%

The family threshold is increased by $1,500 for each dependent child after the first. For a couple with three children, the FY2025-26 family Tier 1 threshold becomes $194,000 + (2 × $1,500) = $197,000.

The surcharge applies to your MLS income, which is broader than taxable income. The ATO defines it as taxable income + reportable fringe benefits + reportable employer super contributions and personal salary-sacrificed super + total net investment loss (including the loss from a negatively geared rental property) + (where applicable) certain trust distributions and exempt foreign employment income. Salary packaging that lowers your taxable income generally does not lower your MLS income.

For partial-year cover, the surcharge is calculated on a day-based proportional rule: full-year MLS × (days uninsured / 365). So 200 days covered out of 365 leaves 165 days uninsured and 165/365 of the full-year surcharge.

How to read the inputs

• Financial year — FY2025-26 uses the ATO-published thresholds. FY2026-27 is shown as a placeholder at +3% on every threshold; replace it with the published schedule once the ATO publishes (usually April–June).
• Filing type — Single uses the singles thresholds. Family / couple combines your income with your spouse's and tests against the family thresholds (with the dependent-child uplift).
• Your MLS income — not your gross salary. Add reportable fringe benefits (grossed up), reportable super contributions and any net investment / rental loss to your taxable income.
• Spouse's MLS income — same definition, for your spouse or de facto partner.
• Dependent children — the family threshold is lifted by $1,500 for each child after the first.
• Days with appropriate hospital cover — days during the income year that you (and any dependants) held eligible private patient hospital cover from a registered Australian health insurer. Extras-only cover does not count.
• Annual hospital cover premium — the annual cost of the basic hospital policy you are comparing against. Used for the break-even comparison only.

Worked examples

1. Single on $90,000, no cover. MLS income is below the $97,000 singles threshold, so Tier 0 applies and there is no surcharge. Hospital cover here is a Lifetime Health Cover and lifestyle decision, not a tax decision.

2. Single on $110,000, no cover for the full year. Tier 1 applies at 1.0% × $110,000 = $1,100 for the year. The cheapest singles hospital policy in the market sits roughly $1,000 to $1,400. The break-even is genuinely close at this tier — if your cheapest quote is over $1,200 the surcharge may actually be the cheaper choice in pure dollar terms, before considering what hospital cover gets you in return.

3. Single on $200,000, no cover for the full year. Tier 3 applies at 1.5% × $200,000 = $3,000 for the year. Almost any compliant basic singles hospital policy is well under $3,000, so the surcharge is the more expensive choice. Break-even is decisively in favour of cover at this income.

4. Couple on $110,000 + $100,000 = $210,000 combined, no kids, no cover. Combined MLS income exceeds the family Tier 1 threshold ($194,000) so Tier 1 applies at 1.0%. The surcharge is applied to the income of the uninsured taxpayer — in this calculator, your own MLS income — so 1.0% × $110,000 = $1,100.

5. Family of five (couple + three children) on $195,000 combined. The family Tier 1 threshold is lifted to $194,000 + (2 × $1,500) = $197,000. $195,000 is below the lifted threshold, so the family is in Tier 0 and the surcharge is $0. Without the children the same income would have been Tier 1.

6. Single on $130,000 with cover from 1 January (181 days covered). Tier 2 applies at 1.25%. Full-year MLS = 1.25% × $130,000 = $1,625. Days uninsured = 365 − 181 = 184. Annual MLS = $1,625 × 184/365 ≈ $819. Holding cover for the second half of the year roughly halves the surcharge.

Common pitfalls

• Extras-only cover does not exempt you. Dental, optical and physio cover is not the same thing as hospital cover. Only an eligible private patient hospital policy with an excess of $750 or less for singles ($1,500 or less for couples and families) avoids the MLS.
• Salary packaging does not reduce MLS income. The ATO grosses up reportable fringe benefits and adds back reportable super contributions specifically so packaging cannot push you below the threshold.
• The threshold is a cliff, not a tax bracket. Once you cross from Tier 0 into Tier 1, the surcharge applies to your whole MLS income (subject to the day-based proportional rule), not just the slice above the threshold. A $1 pay rise across the threshold can cost over $970 in surcharge for a single earner.
• Day-based proportional, not month-based. Cover that starts on 14 March is counted from 14 March, not from 1 March or 1 April. Even a single day uninsured triggers the proportional surcharge on that day.
• MLS is on top of the 2% Medicare Levy. A single earner on $130,000 with no cover would pay roughly 2% Medicare Levy plus 1.25% MLS — a combined Medicare-related impost of around 3.25% of taxable income.
• Lifetime Health Cover (LHC) loading is separate. Joining hospital cover after age 31 attracts a 2% LHC loading per year, capped at 70%. This is a separate cost on top of the base premium and is not what the MLS calculator measures — but it does affect the realistic premium quote you should plug in for the break-even.
• The proposed FY2026-27 thresholds shown here are a placeholder. The ATO normally publishes the next year's thresholds in April–June. Re-check ato.gov.au before relying on a precise figure for tax planning.

When to talk to a professional

This calculator gives a general estimate based on public ATO and PrivateHealth.gov.au material. For advice on the interaction between MLS and specific decisions — choosing the right hospital policy for your needs, optimising income across financial years, dealing with overseas income, or running a salary packaging arrangement through a not-for-profit hospital — talk to a registered tax agent and a registered insurance broker. Nothing on this page is personal tax, financial or insurance advice.

Related calculators

• HECS-HELP repayment calculator — the same income definition (HRI vs MLS income overlap heavily) drives the compulsory study-loan repayment.
• NSW stamp duty calculator — if you are also stress-testing a property purchase, see the upfront duty bill.
• VIC stamp duty calculator — the same exercise for a Melbourne purchase.
• Working holiday tax calculator — WHM 417 / 462 visa holders are typically not liable to MLS but family/partner income tests still matter once visas change.
• Division 293 super tax calculator — another high-income tax assessed on an expanded income definition; useful in the same year as MLS modelling.

Source: ATO — Medicare Levy Surcharge · ATO — MLS income thresholds and rates · ATO — Income for MLS purposes · PrivateHealth.gov.au — Medicare Levy Surcharge · PrivateHealth.gov.au — Lifetime Health Cover.