How the Medicare Levy Surcharge works

The more you earn, the more it pays to have hospital cover come tax time.  
  • The Medicare Levy Surcharge is designed to encourage higher earners to take out private health cover
  • If your income is below the current threshold you’re exempt from the surcharge
  • If your income is above the threshold you could avoid the surcharge by getting hospital cover

Most Australian taxpayers contribute to the public health system through an annual payment (known as the Medicare Levy), which is currently 2% of taxable income.

The Medicare Levy Surcharge is an additional tax on high-income earners who don’t have private hospital cover. It’s designed to reduce the burden on the public system.

The current thresholds are $90,000 for singles and $180,000 for couples (increasing by $1,500 for each dependant child after the first).

If your earnings fall below this you’re exempt from the surcharge. If your income is above the threshold you could be liable for the surcharge unless you take out hospital cover with an Australian registered health fund.

Which surcharge tier are you in?

Here are the surcharge tiers for the 2015-16 and 2017-18 financial years:


SINGLES < or = $90,000 $90,001 - 105,000 $105,001 - 140,000 > or = $140,001
FAMILIES* < or = $180,000 $180,001 - 210,000 $210,001 - 280,000 > or = $280,001
ALL AGES 0.0% 1.0% 1.25% 1.5%

* Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. 

For more information on the Medicare Levy Surcharge go to the Australian Tax Office.

The information provided on this page is general information only, not advice. For advice about how this may affect you, please contact your financial adviser.

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