Take a resident with $80,000 of taxable income. Because that sits well above the upper phase-in threshold of $34,027, the full 2 percent Medicare Levy applies to the whole income. The levy is 2 percent of $80,000, which is $1,600. This is separate from PAYG income tax and is added on top of it. A lower earner is treated differently: someone on $30,000 falls inside the phase-in band between $27,222 and $34,027, so they pay a reduced levy rather than the full 2 percent, and anyone below $27,222 pays no Medicare Levy at all. High earners without private hospital cover may also face the separate Medicare Levy Surcharge, which this calculator does not include.
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How it is calculated
The Medicare Levy helps fund Australia's public health system and is calculated on your taxable income in three zones. Below the lower threshold of $27,222 for singles, the levy is zero. Between $27,222 and $34,027 it phases in, so the calculator scales the 2 percent by how far you are through that band, giving a reduced levy. Once your income passes $34,027, the full 2 percent applies to your entire taxable income, not just the part above the threshold. The tool reports which zone you are in so the result is easy to interpret. It deliberately excludes the Medicare Levy Surcharge and any family or senior threshold variations, which depend on your spouse, dependants, and private hospital cover, so figures for those situations will differ.
Frequently asked questions
Who is exempt?
Norfolk Island residents, foreign residents (most), seniors with low income, those qualifying for full Medicare exemption (some defence members, certain foreign residents).
What is the low-income threshold for 2025/2026?
For the 2025/2026 income year, individuals with taxable income at or below $27,222 pay no Medicare Levy. Those earning between $27,222 and $34,027 are in the phase-in zone and pay a reduced levy. Once income exceeds $34,027, the full 2 percent applies to the entire taxable income.
Is the Medicare Levy the same as the Medicare Levy Surcharge?
No, they are separate charges. The Medicare Levy is 2 percent of taxable income and applies to most Australian residents. The Medicare Levy Surcharge is an additional charge of 1 to 1.5 percent that only applies to higher-income earners who do not hold an approved private hospital cover policy.
Does the Medicare Levy apply to all types of income?
The Medicare Levy is calculated on your total taxable income, which includes salary and wages, business income, investment income, and most other assessable amounts. Some specific exemptions exist for particular income types, but for most individuals all ordinary income is included in the base for the levy calculation.