Medicare Levy Calculator — How Much Medicare Levy Do You Pay? — Australia 2026
Calculate your Medicare Levy and Medicare Levy Surcharge obligations in Australia. See income thresholds and exemptions for 2026.
The Medicare Levy is a 2% tax on taxable income that funds Australia public healthcare system. Most taxpayers pay the full 2% but low-income earners pay a reduced rate or are exempt. The Medicare Levy Surcharge (additional 1-1.5%) applies to singles earning above $93000 and families above $186000 who do not have private hospital cover. Taking out basic private health insurance avoids the surcharge and often costs less.
How much is Medicare Levy on $80000 salary?
On an $80000 taxable income the Medicare Levy is $80000 x 2% = $1600 per year or $133 per month. This is in addition to your regular income tax. The levy is automatically included in your PAYG withholding so you do not need to pay it separately. Low-income earners below $24276 pay no Medicare Levy and those between $24276-$30345 pay a reduced rate.
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Medicare Levy Calculator
How Tax Calculation Works
Income tax is calculated on your total taxable income after deducting eligible exemptions and deductions from your gross income. The tax is applied progressively — you pay a lower rate on initial income slabs and higher rates only on income that exceeds each threshold. This means moving into a "higher tax bracket" does not mean your entire income is taxed at the higher rate. Understanding marginal vs effective tax rate is crucial: your marginal rate applies only to the last rupee earned, while your effective rate is the average across all slabs.
Tax-Saving Strategies
Under the old regime, maximize deductions: Section 80C allows up to Rs 1.5 lakh through PPF, ELSS, EPF, and life insurance. Section 80D covers health insurance premiums up to Rs 25,000 (Rs 50,000 for senior citizens). Section 80CCD(1B) offers an additional Rs 50,000 deduction for NPS contributions. Home loan interest up to Rs 2 lakh is deductible under Section 24. Under the new regime, the Rs 75,000 standard deduction and lower slab rates may save you more if your total deductions are below Rs 3.75 lakh. Calculate under both regimes before choosing.
Key Information
| Parameter | Details |
|---|---|
| Medicare Levy Rate | 2% of taxable income |
| MLS Single Threshold | $93000 income |
| MLS Family Threshold | $186000 income |
| MLS Rate | 1% - 1.5% (without private cover) |
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Use Calculator NowFrequently Asked Questions
How much is Medicare Levy on $80000 salary?
On an $80000 taxable income the Medicare Levy is $80000 x 2% = $1600 per year or $133 per month. This is in addition to your regular income tax. The levy is automatically included in your PAYG withholding so you do not need to pay it separately. Low-income earners below $24276 pay no Medicare Levy and those between $24276-$30345 pay a reduced rate.
Should I get private health insurance to avoid MLS?
If you earn above $93000 (single) compare the MLS cost versus basic hospital cover. The MLS on $120000 income is $1200 per year (1%). Basic hospital cover may cost $1200-$1800 per year but provides actual health coverage. Above $140000 income the MLS rises to 1.25% ($1750) making private cover clearly better value. Most financial advisors recommend taking basic hospital cover once income exceeds the threshold.
What does Medicare Levy actually cover?
Medicare Levy funds Australia public healthcare including free treatment at public hospitals subsidised GP visits through bulk billing PBS pharmaceutical subsidies and diagnostic imaging. It does not cover dental optical physiotherapy or private hospital stays. Having private health insurance does not exempt you from the Medicare Levy — you still pay the 2% but avoid the additional surcharge.
Which tax regime should I choose — old or new?
Choose the new regime if your total deductions are below Rs 3.75 lakh. Choose the old regime if you claim HRA, 80C (Rs 1.5L), 80D, home loan interest, and NPS totaling more than Rs 3.75 lakh. Salaried employees can switch every year.
Is income up to Rs 12 lakh really tax-free?
Under the new regime for FY 2025-26, income up to Rs 12 lakh is effectively tax-free due to Section 87A rebate. After Rs 75,000 standard deduction, taxable income is Rs 11.25 lakh which qualifies for full rebate. However, income even slightly above Rs 12 lakh loses this entire benefit.
How can I save more tax legally?
Under the old regime, maximize 80C (Rs 1.5L via PPF, ELSS, EPF), 80D (Rs 25K-50K for health insurance), 80CCD(1B) (Rs 50K for NPS), HRA exemption, and home loan interest (Rs 2L under Section 24).
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Last updated: March 2026