Medicare Levy Surcharge Thresholds 2025–26 (Singles, Couples & Families)

The Medicare Levy Surcharge is an additional tax that applies when your income exceeds the relevant threshold and you don't hold qualifying private hospital cover for the full year. It exists to encourage higher-income earners to take out private health insurance and reduce pressure on the public system.

MLS uses a tier system. Tier 0 means no MLS. Once your income crosses the Tier 1 threshold, your MLS rate becomes 1.0%. Cross the Tier 2 threshold and it rises to 1.25%. Cross Tier 3 and it's 1.5%. Each rate applies to your entire MLS income — not just the amount above the threshold — so moving from one tier to the next can make a material difference.

The critical detail is the income measure. MLS doesn't use your ordinary taxable income — it uses income for MLS purposes, which adds back items that reduce taxable income but still represent economic capacity. This typically includes reportable fringe benefits, reportable employer super contributions (above the concessional cap), and total net investment losses such as negative gearing losses. Two people with identical taxable incomes can have meaningfully different MLS income figures depending on these factors.

Another key rule: MLS only applies when you lack qualifying private hospital cover for the relevant period. Extras-only and ambulance-only policies don't count. Your hospital policy must meet ATO requirements, including limits on excess amounts. If you hold a qualifying policy for part of the year, MLS is calculated on a daily basis for the periods without cover.

Finally, MLS thresholds were frozen from 2014–15 through 2024–25 but have been increased for 2025–26. Despite this increase, years of wage growth mean many Australians remain above the thresholds. If you're close to a threshold, even a bonus payment, fringe benefit, or salary sacrifice adjustment can tip you over.