Does your household hold qualifying cover?
Partner 1
Partner 2
Combined Family Assessment
Combined MLS Income
$205,000
Family Threshold
$202,000
Tier
Tier 1
Total Annual MLS
$2,050
MLS of $2,050/year applies to your household.
The 1% surcharge is applied to each partner's individual taxable income ($1,200 + $850), not to the combined income. This is a common misunderstanding.
Partner 1
- Taxable Income
- $120,000
- MLS Income
- $120,000
- MLS Rate (on taxable income)
- 1%
- Annual MLS
- $1,200
- Monthly MLS
- $100
Partner 2
- Taxable Income
- $85,000
- MLS Income
- $85,000
- MLS Rate (on taxable income)
- 1%
- Annual MLS
- $850
- Monthly MLS
- $71
Cover vs MLS Comparison
Total Annual MLS
$2,050
$171/month
Couple Cover (after rebate)
$2,347
$2,800 before rebate
MLS is Cheaper By
$297
per year vs buying cover
Recommendation: At your combined income level, paying the MLS ($2,050/year) is cheaper than couple cover ($2,347/year after rebate). However, private cover offers additional health benefits beyond MLS exemption.
How Couple MLS Actually Works
Many people assume the MLS is calculated on the combined income. It's not. Here's how the ATO actually calculates it:
- Combined income determines the tier: Your combined MLS income of $205,000 puts you in Tier 1 (1%).
- Each partner is charged individually: The 1% rate is applied to each partner's individual taxable income, not the combined amount.
- Partner 1: $120,000 × 1% = $1,200
- Partner 2: $85,000 × 1% = $850
This means a couple where one partner earns significantly more will pay more total MLS than a couple with the same combined income split evenly.
Family MLS Tier Thresholds
| Tier | Combined Income Range | Rate | Status |
|---|---|---|---|
| Tier 0 — No MLS | $0 – $202,000 | 0% | |
| Tier 1 | $202,001 – $236,000 | 1% | Your tier |
| Tier 2 | $236,001 – $316,000 | 1.25% | |
| Tier 3 | $316,001+ | 1.5% |
Family thresholds increase by $1,500 for each dependent child after the first.
Frequently Asked Questions
- The ATO uses your combined family income (both partners’ MLS incomes added together) to determine which MLS tier you fall into. However, the surcharge itself is applied to each partner’s individual taxable income at that tier’s rate. This means the total MLS is the sum of each partner’s individual surcharge, not a single charge on the combined income.
- For the 2025–26 financial year, the family MLS threshold is $202,000. If your combined family MLS income is below this amount, no MLS is payable. The threshold increases by $1,500 for each dependent child after the first.
- MLS income includes taxable income, reportable fringe benefits, reportable super contributions, and net investment losses (added back). This is calculated separately for each partner, then combined to determine the family’s tier.
- Even if one partner earns below the single threshold ($101,000 in 2025–26), MLS may still apply. The tier is determined by combined family income, and the surcharge is charged on each partner’s individual taxable income at that tier’s rate — including the lower-earning partner.
- Yes. To be exempt from MLS, the couple needs a qualifying private hospital insurance policy that covers both partners (and any dependent children). A singles-only policy for one partner will not exempt the family from MLS.
- The first dependent child is already factored into the family threshold of $202,000. Each additional dependent child after the first increases the threshold by $1,500. For example, a family with 3 children has a threshold of $205,000 ($202,000 + 2 × $1,500).
How is MLS calculated for couples and families?
What is the family income threshold for MLS in 2025–26?
What counts as MLS income?
What if one partner earns below the single threshold?
Do both partners need private hospital cover to avoid MLS?
How do dependent children affect the MLS threshold?
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Disclaimer: This calculator provides estimates based on publicly available ATO rates and thresholds for the 2025\u201326 financial year. Indicative cover costs are based on basic hospital policies and will vary by insurer, age, and state. This is general information only and does not constitute financial or tax advice. Consult a registered tax agent for advice specific to your situation.