Calculating the Medicare Levy (ML) for most people is a simple case of applying 2% to your taxable income (plus MLS if applicable).
The Medicare Levy Surcharge (MLS) may apply if Private Health Cover insurance is not taken and is not covered in this post, but for reference here is the ATO link
https://www.ato.gov.au/individuals-and-families/medicare-and…
For those on low income or exemptions, different rules apply and the ML calculation formula is a well kept secret.
The below ATO calculator can be used as applicable (with no explanation on how ML is calculated)
https://www.ato.gov.au/single-page-applications/calculatorsa…
The applicable low income tiers that came in effect with the 2025 budget are retrospectively applied from 1st July 2023 and detailed below.
| Category | Tier 1 | Tier 2 |
|---|---|---|
| Single | $26,000 | $32,500 |
| Family | $43,846 | $54,807 |
| Single S&P | $41,089 | $51,361 |
| Family S&P | $57,198 | $71,497 |
Note: For Families and Family S&P, add $4,027 to Tier 1 and $5,034 to Tier 2 for each dependent child/student.
S&P stands for eligible Seniors & Pensioners.
Based on taxable income, the applicable ML is calculated as per below
| Taxable Income | Medicare Levy Calculation |
|---|---|
| Up to Tier 1 | Medicare Levy Not Applicable |
| Within T1&T2 | (Taxable Income - Tier 1) x 10% |
| Above Tier 2 | 2% plus any applicable MLS |
As I was asked in a comment about MLS, I added some details below.
To avoid the MLS, you must have at least basic Hospital Private Health Care cover for yourself and if applicable you partner and all dependants.
If you do not have private cover by 1st July following your 31st birthday an additional 2% Lifetime Health Cover (LHC) loading applies to applicable individuals on the private care premium for each year over 30 without cover (for 5 years that is 10% loading). The LHC loading has to be paid for 10 continuous years before is removed.
The 2025 Medicare Levy Surcharge Thresholds are as per below.
The check is against all income, including any reportable super contributions above the current SGC rate.
| Threshold | Base Tier | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|---|
| Single | $97,000 or less | $97,001 – $113,000 | $113,001 – $151,000 | $151,001 or more |
| Family | $194,000 or less | $194,001 – $226,000 | $226,001 – $302,000 | $302,001 or more |
| Surcharge | 0% | 1% | 1.25% | 1.5% |
A bit easier to read. Not checked for accuracy.
Note: For Families and Family S&P, add $4,027 to Tier 1 and $5,034 to Tier 2 for each dependent child/student. S&P stands for eligible Seniors & Pensioners.