How the Medicare Levy Surcharge works

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The more you earn, the more it pays to have hospital cover at 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 thresholds, you don't have to pay 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 top of the Medicare Levy for Australian taxpayers who are high-income earners and don’t have private hospital cover. It’s designed to reduce the burden on the public system by encouraging the uptake of private health cover.

The thresholds from 1 July 2024 are $97,000 for singles and $194,000 for families or couples (increasing by $1,500 for each dependant child after the first).

If your earnings fall below this you don't have to pay the surcharge. If your income is above the threshold and you're required to pay the Medicare Levy Surcharge, you could avoid paying the surcharge if you take out hospital cover with an Australian registered health fund.

Which surcharge tier are you in?

Here are the income thresholds and rates from 1 July 2024:

Threshold Base tier Tier 1 Tier 2 Tier 3
SINGLES < or = $97,000 $97,001 - $113,000 $113,001 - $151,000 > or = $151,001
FAMILIES* < or = $194,000 $194,001 - $226,000 $226,001 - $302,000 > or = $302,001
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 dependant child after the first. 

For more information on the Medicare Levy Surcharge, visit the Australian Taxation 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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