Australia Medicare Levy Surcharge Calculator

This calculator rests on two figures of very different quality.

The surcharge rates are verified. Section 8B(2) of the Medicare Levy Act 1986 charges "1% of the person's taxable income"; s 8B(3) adds "0.25 of a percentage point" for a tier 2 earner and s 8B(4) adds "0.5 of a percentage point" for a tier 3 earner. Sections 8C and 8D carry the same structure for other categories of person. That gives 1%, 1.25% and 1.5%, read directly from Compilation No. 53 of the Act, compilation date 1 July 2026.

The tier income thresholds are not verifiable. Section 3(1) of the Medicare Levy Act defines them by reference to the Private Health Insurance Act 2007 (series C2007A00031). Section 22-35 of that Act states A$90,000, A$105,000 and A$140,000, but expressly "for the 2021-22 and 2022-23 financial year", each followed by a note that the amount is indexed for later financial years under s 22-45. Section 22-45 indexes them by an AWOTE-based factor rounded down to the nearest A$1,000, using ABS index numbers that appear in no legislative instrument. The indexed current-year amounts therefore appear in NO Act and NO legislative instrument; they are published administratively only. This engine refuses to hardcode a guess: the three thresholds are user inputs defaulting to the stale statutory base, which is certainly lower than the current figures. Enter the current-year thresholds before relying on the tier this page assigns you.

A second distinction runs through the Act and catches people out. Liability is tested on income for surcharge purposes, which is taxable income plus reportable fringe benefits and reportable employer superannuation contributions. The surcharge is then charged on taxable income. The two are different numbers whenever benefits are reported, which is why salary sacrificing into superannuation cannot lift you out of a tier.

Using the defaults: taxable income A$120,000, no reportable fringe benefits, no hospital cover, singles thresholds of A$90,000, A$105,000 and A$140,000 as entered, no family thresholds.

1. Step 1 -- Compute income for surcharge purposes. Taxable income plus reportable fringe benefits and reportable employer super contributions. A$120,000 + A$0 = A$120,000.00

1. Step 2 -- Apply the family conversion if it applies (PHI Act s 22-40). The family thresholds are not engaged here, so the singles thresholds are used unchanged. Tier 1 = A$90,000, tier 2 = A$105,000, tier 3 = A$140,000

1. Step 3 -- Check for complying private patient hospital cover (s 8B(1)(c)). No cover is held, so the exclusion does not apply. Cover held = false

1. Step 4 -- Test against the tier 1 threshold. Below or at it, no surcharge is imposed at all. A$120,000.00 > A$90,000, so the person is liable

1. Step 5 -- Determine the tier. Above tier 2 but not above tier 3. A$105,000 < A$120,000.00 <= A$140,000, so tier 2

1. Step 6 -- Select the rate (ss 8B(2) and 8B(3)). 1% plus 0.25 of a percentage point. 1% + 0.25% = 1.25%

1. Step 7 -- Charge the rate on TAXABLE INCOME, not on income for surcharge purposes. A$120,000 x 1.25% = A$1,500.00

1. Step 8 -- Compare against the premium entered. The default premium is A$1,600. A$1,500.00 - A$1,600.00 = -A$100.00, so on cost alone the surcharge is the cheaper of the two

1. Step 9 -- Show the ordinary levy alongside it (s 6(1)). The surcharge is in addition to the 2% levy, not instead of it. A$120,000 x 2% = A$2,400.00, giving a total Medicare cost of A$3,900.00

Two features of the Act only appear once you change the defaults.

Reportable benefits can trigger the surcharge on their own. Take taxable income of A$88,000 with A$10,000 of reportable fringe benefits and no cover.

1. Income for surcharge purposes: A$88,000 + A$10,000 = A$98,000.00.
2. That exceeds the A$90,000 tier 1 threshold entered but not A$105,000, so tier 1 applies at 1%.
3. The charge is on taxable income: A$88,000 x 1% = A$880.00.

Taxable income alone was below the threshold, so nothing in the pay figure would have warned you, and the A$10,000 of benefits added A$880.00 of surcharge without adding a dollar to the base the rate is charged on.

The s 8D(3)(c) floor protects a low-earning spouse. Section 8D(3) makes a married person liable only where the couple's combined income for surcharge purposes exceeds the family tier 1 threshold and "the person's income for surcharge purposes exceeds A$28,011", a figure raised from A$27,222 by Act No. 58 of 2026. Consider a couple on A$200,000 combined, above the doubled A$180,000 family tier 1 threshold, where one spouse earns A$175,000 and the other A$25,000. The high earner is liable; the low earner is not, because A$25,000 does not exceed A$28,011, however high the household income goes. Separately, because s 22-40 doubles each singles threshold, a couple on A$170,000 combined pays nothing at all even though A$170,000 would be tier 3 for a single person.

• THE TIER THRESHOLDS ARE UNVERIFIED. The A$90,000, A$105,000 and A$140,000 defaults are the Private Health Insurance Act 2007 s 22-35 base amounts, stated by the Act only for the 2021-22 and 2022-23 financial years and indexed since under s 22-45. The current-year indexed amounts appear in no Act and no legislative instrument and could not be verified from a primary source. They are almost certainly higher than these defaults, which means this page will over-assign tiers unless you enter the current figures. Only the rates, the s 8D(3)(c) floor and the A$1,500 per-child increment are verified statute.
• Part-year cover. The cover question is all or nothing here. In law the surcharge is imposed for the days on which cover was not held, so someone insured for part of the year pays a proportion.
• What counts as complying cover. No test of the policy is applied. Extras-only cover does not remove the surcharge, and nor may a hospital policy with an excess above the statutory limit.
• The private health insurance rebate. The rebate that reduces the premium you actually pay is income-tested on the same tiers and is not modelled, so step 8 uses the gross premium you enter.
• The dependant definition. Dependent children are taken as entered; no eligibility test is applied.
• The ordinary levy shown alongside. It is shown for context, not as a full levy calculation.

• Confusing the surcharge with the levy. The 2% Medicare levy applies to nearly everyone. The surcharge is an additional charge, only on people above tier 1 who do not hold complying hospital cover, and it does not replace the levy.
• Assuming the surcharge is charged on the income that was tested. It is not. Section 8B(2) charges a percentage of taxable income; income for surcharge purposes only decides liability and tier.
• Salary sacrificing to get under a threshold. Reportable employer superannuation contributions are added back into income for surcharge purposes, so the sacrifice does not move the test.
• A low-earning spouse assuming they are liable. The s 8D(3)(c) floor of A$28,011 means a spouse below that figure is not liable however high the couple's combined income.
• Trusting the default thresholds. They are years out of date by construction. This is the single largest source of error on this page.

• Medicare Levy Act 1986, series C2004A03351, Compilation No. 53, compilation date 1 July 2026, ss 3(1), 3A, 6 and 8B to 8G: https://www.legislation.gov.au/C2004A03351/latest/text
• Private Health Insurance Act 2007, series C2007A00031, Compilation No. 41, compilation date 1 April 2026, ss 22-30, 22-35, 22-40 and 22-45: https://www.legislation.gov.au/C2007A00031/latest/text
• Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Act 2026, No. 58, 2026 (raised the s 8D(3)(c) floor to A$28,011): https://www.legislation.gov.au/C2026A00058/latest/text