The Medicare levy helps fund Australia's public healthcare system and is charged on top of income tax for most residents. It's a flat percentage, but with a couple of important exceptions at the lower end of the income scale.
The Standard Rate
For most taxpayers, the Medicare levy is 2% of taxable income, added directly to your income tax bill. On a $60,000 taxable income, that's $1,200 a year — noticeably smaller than income tax itself, but it applies to essentially every working Australian resident.
Low-Income Exemptions and Phase-In
If you're single and your taxable income is $28,011 or less in 2026–27, you pay no Medicare levy at all. Just above that threshold, the levy phases in gradually — you pay 10 cents for every dollar over the threshold, rather than jumping straight to the full 2%, until the two calculations converge and the standard rate takes over. Family thresholds are higher and depend on the number of dependent children.
The Medicare Levy Surcharge Is a Different Thing
It's easy to confuse the levy with the Medicare levy surcharge (MLS), but they serve different purposes. The surcharge is an additional 1% to 1.5%, charged only to higher-income earners who don't hold an appropriate level of private hospital cover. It exists to reduce pressure on the public system by encouraging people who can afford it to take out private insurance. If you already have hospital cover, the surcharge doesn't apply to you regardless of income.
How It Fits Into Your Overall Tax
The Medicare levy is calculated separately from income tax brackets and the low income tax offset — it has its own threshold and phase-in rules, and the offset doesn't reduce it. Work out your levy and surcharge together with our Medicare Levy Calculator, see how it fits alongside your income tax and any HELP repayments with our Take Home Pay Calculator Australia, or view it alongside a full tax breakdown with our Income Tax Calculator Australia.
Sources: ATO — Medicare levy; ATO — Medicare levy surcharge income, thresholds and rates.