Medicare Levy Calculator

What is the Medicare Levy?

The Medicare Levy is a separate 2% charge on top of your income tax, paid by most Australian residents to help fund Medicare, Australia's public healthcare system. It is calculated on your whole taxable income (not in progressive slices like income tax brackets), and it is entirely separate from private health insurance; you pay it whether or not you hold private cover.

The Medicare Levy is different from the Medicare Levy Surcharge (MLS), an additional charge (1-1.5%) that applies only to higher-income earners who don't hold private hospital cover. This calculator covers the standard Medicare Levy only, since the surcharge depends on your private health insurance status and family income, which a single-income-input calculator can't determine reliably.

2025-26 low-income reduction thresholds

If your taxable income is low, you pay a reduced Medicare Levy or none at all. The 2025-26 single-person thresholds are:

These are the single-person thresholds. Families and seniors/pensioners have higher thresholds that account for a spouse and dependent children; those variants aren't modelled by this calculator, which deliberately covers the more common single-taxpayer case clearly rather than approximating every household scenario.

How the shade-in formula works

In the reduction zone between $28,011 and $35,013, the levy doesn't jump straight to 2%; it phases in gradually. The formula is 10 cents of levy for every dollar of taxable income above $28,011, capped at whatever the full 2% would be. This shade-in mechanism means there's no sudden cliff where earning one extra dollar costs you hundreds of dollars in levy; the increase is smooth and proportional.

For example, at exactly $30,000 taxable income: the amount over the $28,011 threshold is $1,989, and 10 cents per dollar of that is $198.90, noticeably less than the $600 the full 2% rate would produce on the same income.

Worked examples

$20,000 taxable income. Below the $28,011 exemption threshold; Medicare Levy is $0.

$30,000 taxable income. Inside the reduction zone. Amount over $28,011 is $1,989; shade-in levy = $1,989 × 10% = $198.90.

$35,013 taxable income. Right at the top of the reduction zone. Shade-in levy = ($35,013 − $28,011) × 10% = $700.20, which is very close to (and capped at) the full 2% rate: $35,013 × 2% = $700.26; the two formulas meet almost exactly at this threshold by design.

$100,000 taxable income. Above the reduction zone; full 2% applies to the whole amount: $100,000 × 2% = $2,000.

Who doesn't pay the Medicare Levy

Besides residents below the exemption threshold, a few other categories don't pay the standard Medicare Levy:

• Foreign residents for tax purposes; they don't pay the Medicare Levy at all, regardless of income (see the main income tax calculator's resident/foreign-resident toggle).
• Some categories of exemption apply for people not entitled to Medicare benefits (for example, certain visa holders); this requires a specific ATO exemption category and isn't modelled here.
• Blind pensioners and some other specific ATO-defined exempt categories.
• People whose family income falls under the (higher) family reduction thresholds; not modelled by this single-person calculator.

Medicare Levy vs. income tax: two separate calculations

It's easy to assume the Medicare Levy is just another tax bracket, but it works differently to the progressive income tax brackets shown on the main income tax calculator. Income tax is calculated in slices; each portion of your income is taxed at its own bracket rate. The Medicare Levy, by contrast, is calculated as a single flat percentage (2%) applied to your entire taxable income at once, once you're above the reduction zone; there's no bracket structure to it at all.

That's also why the reduction zone matters so much: because the levy is calculated on the whole amount rather than in slices, a taxpayer just above the exemption threshold would otherwise face a sudden jump from $0 to a meaningful levy amount on their very next dollar earned. The shade-in formula exists specifically to avoid that cliff-edge effect, smoothing the transition instead of creating it.

When you use the main income tax calculator, both the income tax and the Medicare Levy are calculated together and added into your total tax figure; this page exists to let you isolate and examine the Medicare Levy component on its own, in more detail than the combined result shows. No figures you enter are ever sent anywhere; see the privacy page for details.