Medicare levy explained for 2026–27
Understand the standard 2% levy, the low-income phase-in and why the Medicare levy surcharge is a separate test.
The levy in one sentence
The Medicare levy is normally 2% of taxable income, but a low-income threshold can reduce or eliminate it. It is collected through the tax system and is separate from ordinary resident income tax.
Single low-income thresholds used here
| 2026–27 taxable income | Simplified levy |
|---|---|
| $28,011 or less | Nil |
| Above $28,011 and below the full-rate point | Phase-in at 10 cents for each $1 above $28,011, capped at 2% of taxable income |
| $35,013 or more | 2% of taxable income |
The calculator uses this single-person, no-dependants path. Family thresholds and the extra amount for dependent children require household information that the salary field does not collect.
Exemptions
Some people qualify for a full or half exemption, including certain medical, residency and service circumstances. The calculator offers full-year full or half exemption choices as simple scenarios. A real return can apportion exemption days, so a partial-year case should be checked against ATO guidance.
The Medicare levy surcharge is different
MLS is an additional charge for certain higher-income taxpayers who do not have an appropriate level of private patient hospital cover. It uses income for surcharge purposes and family tiers, not just the taxable salary entered in a take-home calculator. It is therefore excluded rather than guessed.
Worked phase-in example
At taxable income of $30,000, 2% would be $600. The phase-in calculation is 10% of the $1,989 above the threshold, or $198.90. The lower phase-in amount applies in the simplified single-person calculation.
Official sources
Include the levy in a salary estimate.
Choose the standard, half-exemption or full-exemption scenario and see the levy beside tax and HELP.