Medicare levy calculator

What the result means

The Medicare levy is a flat 2% of taxable income that most Australian residents pay on top of income tax. It is not part of the bracket rates, and no tax offset reduces it — LITO cannot touch it. Below a low-income threshold you pay nothing, and between the lower and upper thresholds the levy shades in at 10 cents in each dollar above the lower threshold, so crossing the line does not cost you 2% of everything at once. This page shows your own levy on your own taxable income. The Medicare levy surcharge is a separate charge entirely.

How it is calculated

Below lower: $0. Between: 10% × (income − lower). Above upper: 2% × income

• Taxable income: Assessable income less deductions — not gross salary and not income for surcharge purposes.
• Lower / upper thresholds: The published 2026–27 pair: $28,011 and $35,013 single, $44,268 and $55,335 with SAPTO, $47,238 and $59,047 for a family.
• Shade-in rate: 10 cents in the dollar of the excess over the lower threshold, applied instead of the 2% while income sits between the thresholds.
• Family income: Combined taxable income of you and your spouse, or your own income if you are a sole parent.
• Child increment: $4,338 added to the family lower threshold and $5,423 to the upper, for each dependent child.

Two rules are stacked here. The 2% is the levy proper. The shade-in exists so that crossing the lower threshold by a single dollar does not suddenly cost 2% of everything — instead the levy climbs at 10 cents in the dollar until it catches up with the flat rate at the upper threshold. The family test works out a reduction from combined income, 2% of the family lower threshold less 8% of the family income above it, and takes that off your own individual levy, as the ATO's Medicare levy calculator does.

Worked example

$29,000 taxable income, single, in 2026–27

A single resident with no spouse or dependent children and no SAPTO entitlement.

Lower threshold

$28,011

Upper threshold

$35,013

Excess over the lower threshold

$29,000 − $28,011 = $989

Levy at the shade-in rate

10% × $989 = $98.90

A flat 2% would have been

2% × $29,000 = $580

The low-income reduction saves $481.10. It shrinks as income rises — $398.90 at $32,000 — and runs out at $35,013, where the full 2% of $700.26 applies. Income tax on $29,000 is a separate $920 after LITO, so total tax is about $1,019.

The low-income reduction, with the arithmetic

For a single person in 2026–27 the two thresholds are $28,011 and $35,013. Taxable income of $28,011 or less means no levy at all. Above $35,013 you pay the full 2%. In between, the levy is 10 cents for each dollar over $28,011: at $29,000 that is 10% × $989 = $98.90, where a flat 2% would have been $580. At $32,000 it is 10% × $3,989 = $398.90 against a full $640.

The 10% shade-in rate is chosen so that the two lines almost meet at the upper threshold — 10% of the $7,002 gap is $700.20, and 2% of $35,013 is $700.26. This calculator follows the rule literally, applying the shade-in below the upper threshold and the flat 2% at or above it, which leaves a six-cent step at exactly $35,013. Note also that the levy thresholds are set independently of the $18,200 tax-free threshold, so the two charges start at different points: on $25,000 you owe $320 of income tax after LITO and no levy whatsoever.

Family thresholds, and how dependent children move them

If you had a spouse, or you are a sole parent with dependent children, the reduction is tested against combined family taxable income rather than your own. The 2026–27 family thresholds start at $47,238 and $59,047, and each dependent child adds $4,338 to the lower figure and $5,423 to the upper. Where you or your spouse are eligible for the seniors and pensioners tax offset, the family pair becomes $61,623 and $77,028, and the single SAPTO pair is $44,268 and $55,335.

Worked through: you earn $45,000, your spouse earns $8,000, and you have two dependent children. Combined family income is $53,000, and the family lower threshold is $47,238 + 2 × $4,338 = $55,914. Because $53,000 is below that, your levy is nil — where single thresholds alone would have charged 2% of $45,000, or $900. If family income were $62,000 instead, it would sit between $55,914 and the family upper threshold of $69,893. The family reduction is 2% × $55,914 − 8% × ($62,000 − $55,914) = $1,118.28 − $486.88 = $631.40, so your levy is $900 − $631.40 = $268.60. The reduction comes off your own levy, so it can only lower the figure, never raise it.

The base is taxable income, and exemptions are narrow

The levy is charged on taxable income — assessable income less deductions, the same figure income-tax uses. It is not gross salary, and it is not the broader “income for MLS purposes” that the surcharge uses, which adds back things like reportable fringe benefits and reportable super contributions. Because deductions reduce the base, they reduce the levy too: at 2%, a $1,000 deduction is worth $20 off the levy on top of the income tax it saves.

Full and half exemptions do exist, but they are for defined circumstances rather than a general low-income case — certain foreign residents, some people not entitled to Medicare benefits, and people in specified medical categories, usually evidenced by a Medicare Entitlement Statement. None of them are modelled here, so if you think an exemption applies, treat the figure on this page as the unexempted amount and check the ATO's Medicare levy guidance.

Levy versus surcharge — which calculator you actually want

These two charges are constantly confused and they behave nothing alike. The Medicare levy is 2% of taxable income, applies to almost every resident, has a low-income shade-in, and is completely unaffected by private health insurance. The Medicare levy surcharge is an extra 1%, 1.25% or 1.5% that applies only above $105,000 for singles or $210,000 for families, only where you do not hold appropriate private hospital cover, and is charged on a broader income figure with no shade-in at all.

So hospital cover can remove the surcharge but will never remove the levy. If your question is whether private health insurance would save you tax, medicare-levy-surcharge is the page to use. If you want the levy folded into a whole-of-year total rather than shown on its own, use income-tax or salary.

Questions