Medicare Levy vs Medicare Levy Surcharge
They sound similar, but they are not the same charge. Watch this PoliceTax FAQ for a clear explanation of how the Medicare Levy and MLS differ in the 2025–26 financial year.
Video summary
The main distinction to understand before reviewing your tax estimate.
The Medicare Levy and Medicare Levy Surcharge are separate charges. The Medicare Levy generally helps fund Australia’s public health system, while the Medicare Levy Surcharge may apply to higher-income taxpayers who do not hold an appropriate level of private hospital cover. Your income, family circumstances and insurance status can all affect the result.
How the two charges differ
Whether either amount applies depends on your individual tax position for the year.
Medicare Levy
A levy paid by many Australian taxpayers to help fund the public Medicare system.
- Usually calculated as part of your income tax assessment.
- Reductions or exemptions may apply in limited circumstances.
- Private hospital cover does not generally remove the standard levy.
Medicare Levy Surcharge
An additional charge that may apply when income is above the relevant threshold and appropriate private hospital cover is not held.
- Separate from the standard Medicare Levy.
- Income for MLS purposes can include more than taxable income alone.
- Family status and the timing of hospital cover can affect the calculation.
Wondering whether hospital cover is cheaper than the surcharge? Read Is private health insurance worth it? Medicare Levy Surcharge explained for the 2026–27 thresholds and a worked example.
This article provides general information only. Thresholds and personal circumstances can change the outcome, so obtain advice for your own position.
Medicare Levy questions
The questions officers ask us most often about the levy and the surcharge.
Is the Medicare Levy Surcharge the same as the Medicare Levy?
No. They are two separate charges. The Medicare Levy is paid by many Australian taxpayers as part of their income tax assessment. The Medicare Levy Surcharge is an additional charge that may apply on top of it when income is above the relevant threshold and appropriate private hospital cover is not held.
Does having private health insurance remove the Medicare Levy?
Generally no. Holding private hospital cover does not remove the standard Medicare Levy. Appropriate hospital cover is relevant to the Medicare Levy Surcharge, which is the additional charge, not to the standard levy.
What income is counted for the Medicare Levy Surcharge?
Income for surcharge purposes can include more than taxable income alone. Because the definition is broader than many people expect, it is worth checking your position rather than assuming your salary figure is the number that applies.
Does my family situation change the result?
It can. Family status and the timing of when hospital cover started or ended during the year can both affect whether the surcharge applies and how it is calculated for that year.
Unsure what applies to your return?
Our police tax specialists can review your income, family position and hospital cover.