What Is the Medicare Levy Surcharge? A Simple Guide for Australians

 Introduction

If you’ve ever glanced at your tax return and noticed a section about the Medicare Levy Surcharge (MLS), you might be wondering what it means—and whether it applies to you. In this article, we break down the basics of the MLS and how it could impact your income tax in Australia.

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What Is the Medicare Levy Surcharge?

The Medicare Levy Surcharge is an additional tax that applies to Australian taxpayers who earn above a certain income threshold and do not have an eligible private hospital cover. The surcharge is designed to encourage high-income earners to use the private health system, helping to ease the burden on Medicare.

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Who Has to Pay the Surcharge?

You may have to pay the MLS if:

• Your annual income is over $93,000 (for singles) or $186,000 (for couples/families)

• You do not have an approved private hospital insurance policy

These thresholds apply to the 2023–2024 income year and may change annually.

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How Much Is the Medicare Levy Surcharge?

The MLS ranges from 1% to 1.5% of your taxable income. The exact rate depends on how much you earn. Here is a quick breakdown:

• 1%: Income from $93,001 to $108,000 (singles)

• 1.25%: Income from $108,001 to $144,000

• 1.5%: Income above $144,000

(Thresholds double for families.)

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How Can You Avoid the Surcharge?

To legally avoid paying the Medicare Levy Surcharge, you can:

✔ Take out a compliant private hospital insurance policy
✔ Keep your income below the threshold
✔ Ensure your policy meets the minimum requirements for MLS exemption

Having hospital cover even for part of the year can reduce or eliminate the surcharge for that time.

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Common Questions

Q: Is the Medicare Levy the same as the Surcharge?
A: No. The Medicare Levy (2%) applies to most taxpayers. The MLS is separate and only applies to higher-income earners without private hospital cover.

Q: Can the MLS be calculated automatically?
A: Yes, when you lodge your tax return, the ATO assesses your income and whether you had eligible cover. If applicable, the surcharge will be added.

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Conclusion

Understanding the Medicare Levy Surcharge can help you make informed decisions about your health cover and your tax obligations. While it’s not a penalty, the MLS encourages Australians to explore private options—while contributing to the sustainability of our national health system.

If you’re unsure whether you’re liable for the surcharge, it may be helpful to review your income and coverage status.

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📊 Interested in checking whether the MLS applies to you?

Use our simple estimator to get a quick view based on your current income and insurance status.