# Medicare levy calculator

Source: https://calculatax.com/tax/medicare-levy-calculator/
Title: Medicare Levy Calculator 2026-27 (2%) | Calculatax
Last updated: 2026-11-06

The Medicare levy is 2% of taxable income, reduced or removed on low incomes. This calculator applies the latest announced thresholds (2025-26) from the [ATO's Medicare levy reduction for low-income earners page](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy/medicare-levy-reduction/medicare-levy-reduction-for-low-income-earners). A single person earning $31,000 pays **$298.90** instead of $620.

The levy sits on top of [income tax in Australia](https://calculatax.com/tax/) and helps fund Medicare, the public health system. It's charged when your return is assessed and is usually withheld from each pay along the way.

| Default example: single, $31,000 taxable income | Amount |
|---|---|
| Full levy at 2% | $620.00 |
| Shade-in levy: 10% of ($31,000 − $28,011) | $298.90 |
| Medicare levy payable | $298.90 |
| Reduction applied | $321.10 |

*Medicare levy for 2026-27 using the latest announced (2025-26) low-income thresholds. Source: ATO; Medicare Levy Act 1986 s 7.*

## The 2% levy and the low-income shade-in

Most taxpayers pay 2% of their whole taxable income. On low incomes, the levy phases in instead of starting at the full rate.

Below the lower threshold you pay nothing. Between the lower and upper thresholds you pay 10% of the income above the lower threshold, as set by [section 7 of the Medicare Levy Act 1986](https://www.legislation.gov.au/C2004A03351/2025-03-28/2025-03-28/text/original/epub/OEBPS/document_1/document_1.html). Above the upper threshold, the 2% applies to every dollar.

The levy is worked out on taxable income after deductions, so a $1,000 deduction lowers it by $20 at the full rate.

| Single taxable income | Medicare levy | Full 2% for comparison |
|---|---|---|
| $28,011 | $0.00 | $560.22 |
| $30,000 | $198.90 | $600.00 |
| $31,000 | $298.90 | $620.00 |
| $33,000 | $498.90 | $660.00 |
| $35,013 | $700.20 | $700.26 |
| $40,000 | $800.00 | $800.00 |

*Medicare levy for singles under the latest announced (2025-26) thresholds. Source: ATO; Calculatax calculation.*

### The $31,000 example, step by step

A single person with $31,000 of taxable income is $2,989 above the $28,011 lower threshold. 10% of $2,989 is $298.90, which is less than 2% of $31,000 ($620), so the levy is $298.90.

Income tax is $1,920 less the full $700 low income tax offset, so total tax and levy come to $1,518.90.

> **The shade-in costs more per dollar than it looks.** Each extra dollar inside it costs 10 cents of levy on top of 15 cents of income tax. At $31,000 the next $100 of income adds $25 to the bill, an effective rate of 25%.

## Low-income thresholds for singles, families and seniors

The 2026-27 thresholds haven't been announced yet. They're normally set in the May Budget near the end of the income year, as the 2025-26 values were in May 2026. The 2025-26 figures below are the latest available, raised by 2.9% from 1 July 2025 in the 2026-27 Budget.

| Taxpayer | Lower threshold (no levy) | Upper threshold (full 2%) |
|---|---|---|
| Single | $28,011 | $35,013 |
| Single, eligible for SAPTO | $44,268 | $55,335 |
| Family | $47,238 | $59,047 |
| Family, eligible for SAPTO | $61,623 | $77,028 |
| Each dependent child or student | +$4,338 | +$5,423 |

*Medicare levy low-income thresholds for 2025-26, the latest announced. Source: ATO.*

The upper threshold in each row is the lower threshold multiplied by 1.25. That's the point where 10% of the excess catches up with 2% of the total. A single senior eligible for the seniors and pensioners tax offset (SAPTO) on $50,000 pays $573.20 instead of $1,000.

### What happens when the 2026-27 thresholds arrive

If the 2026-27 thresholds rise again, levies inside a shade-in range will fall slightly. The calculator moves to them once the ATO announces them. Results above the upper threshold won't change, because they're already 2% of income.

## Families: the threshold rises with each dependent child

If you have a spouse or a dependent child, the family threshold applies to your combined family income. It starts at $47,238 and rises by $4,338 for each dependent child or student.

| Dependent children or students | Family lower threshold | Family upper threshold |
|---|---|---|
| 0 | $47,238 | $59,047 |
| 1 | $51,576 | $64,470 |
| 2 | $55,914 | $69,893 |
| 3 | $60,252 | $75,316 |
| 4 | $64,590 | $80,739 |

*Family thresholds under the latest announced (2025-26) figures. Source: ATO family income page; Calculatax calculation.*

Take a family with two children, where one parent earns all of the family income.

| Family with two children | $95,000 family income | $62,000 family income |
|---|---|---|
| Where it sits | Above the $69,893 upper threshold | $6,086 above the $55,914 lower threshold |
| How the levy works | No reduction applies | 10% of the amount above the lower threshold |
| Full 2% levy | $1,900 | $1,240 |
| Levy payable | $1,900 | $608.60 |

When both partners earn income, the family reduction is shared between them in proportion to their taxable incomes. The [family income rules](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy/medicare-levy-reduction/medicare-levy-reduction-family-income) set out who counts as a dependant.

## Who pays a reduced levy or none

You pay a reduced levy if your income is between the thresholds above. You pay none if it's below the lower threshold, or if you qualify for an exemption.

Exemptions cover foreign residents for tax purposes and people not entitled to Medicare benefits. To claim the second, you need a Medicare Entitlement Statement from Services Australia. The [M1 instructions](https://www.ato.gov.au/forms-and-instructions/individual-tax-return-2026-instructions/medicare-levy-questions-m1-m2-individual-tax-return-2026/m1-medicare-levy-reduction-or-exemption-2026) list the other exemption categories and how to count exemption days.

Pay withholding assumes the single thresholds. If family income gives you a reduced levy, you can give your employer a Medicare levy variation declaration so less is withheld during the year. Without one, the saving arrives as part of your refund.

Withholding can also reflect an exemption. On $1,250 a week, the amounts are:

- **$219**: Withheld on scale 2
- **$206**: Withheld on scale 6 (Half exemption)
- **$193**: Withheld on scale 5 (Full exemption)

## Medicare levy and Medicare levy surcharge are separate charges

| How they differ | Medicare levy | Medicare levy surcharge (MLS) |
|---|---|---|
| Who pays | Almost every resident taxpayer above the thresholds | Higher earners without appropriate private hospital cover |
| Rate | 2% | An extra 1% to 1.5% |
| Does hospital cover remove it? | Never | Yes, it can |

For 2026-27, the surcharge starts above $105,000 for singles and $210,000 for families, based on [income for MLS purposes](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates). A single on $120,000 with no cover pays $2,400 of Medicare levy plus a surcharge, which the [Medicare levy surcharge calculator](https://calculatax.com/tax/medicare-levy-surcharge-calculator/) works out by day.

## What the levy result leaves out

The result is the levy on the taxable income you enter. It doesn't test whether someone qualifies as your dependant, and it doesn't split a family reduction between partners.

It also leaves out the surcharge, exemption days in part-year situations unless you enter them, and any HELP repayment. For a full tax figure with the levy included, use the [tax calculator](https://calculatax.com/tax/income-tax-calculator/). If you study, the [HECS repayment calculator](https://calculatax.com/tax/hecs-help-repayment-calculator/) adds the compulsory repayment.

## Levy questions: who pays, high bills, part-year residents and spouses

### What is the Medicare levy?

It's a 2% charge on taxable income that helps fund Medicare, Australia's public health system. It's collected with income tax and shown separately on your notice of assessment. People on low incomes pay less or nothing: a single person pays no levy up to $28,011 under the latest announced thresholds.

### Who has to pay the Medicare levy?

Australian residents for tax purposes pay it once their taxable income passes the low-income threshold. That's $28,011 for singles and $47,238 for families under the latest announced figures. Foreign residents and people not entitled to Medicare benefits can claim an exemption, which needs a Medicare Entitlement Statement in the second case.

### Why is my Medicare levy so high?

Once you pass the upper threshold, the levy is 2% of your whole taxable income. On $120,000 that's $2,400. If your notice shows more than 2%, the extra is probably the Medicare levy surcharge, which applies in 2026-27 to singles above $105,000 without appropriate hospital cover.

### Do part-year residents pay the full Medicare levy?

Not always. If you were a foreign resident for part of the income year, you can claim a full exemption for those days at item M1. This applies if you had no dependants for that period, or all your dependants were also exempt. You enter the number of exemption days and the ATO works out the exemption, as its [M1 Medicare levy reduction or exemption instructions](https://www.ato.gov.au/forms-and-instructions/individual-tax-return-2026-instructions/medicare-levy-questions-m1-m2-individual-tax-return-2026/m1-medicare-levy-reduction-or-exemption-2026) explain.

### Does my spouse's income affect my Medicare levy?

Yes, for the low-income reduction. With a spouse, the family threshold of $47,238 applies to your combined income, not your own. If combined income is above the family upper threshold of $59,047, with no children, neither partner gets a reduction, even when one partner earns very little.

### Why do I have to pay the Medicare levy if I rarely use Medicare?

The levy isn't linked to how often you use Medicare. It's a 2% tax on taxable income that helps fund the public system for all residents. Holding private hospital cover doesn't remove it either. Only income below the thresholds, such as $28,011 for a single person, or an exemption category reduces it.

*Estimates only, based on published rates for 2026-27. General information, not tax or financial advice.*

## Sources

- [ATO: Medicare levy reduction for low-income earners](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy/medicare-levy-reduction/medicare-levy-reduction-for-low-income-earners)
- [ATO: Medicare levy reduction: family income](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy/medicare-levy-reduction/medicare-levy-reduction-family-income)
- [ATO: M1 Medicare levy reduction or exemption 2026](https://www.ato.gov.au/forms-and-instructions/individual-tax-return-2026-instructions/medicare-levy-questions-m1-m2-individual-tax-return-2026/m1-medicare-levy-reduction-or-exemption-2026)
- [Medicare Levy Act 1986, s 7](https://www.legislation.gov.au/C2004A03351/2025-03-28/2025-03-28/text/original/epub/OEBPS/document_1/document_1.html)
- [ATO: Medicare levy surcharge income thresholds and rates](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates)