Medicare Levy Surcharge: 1 million Australians to pay for not having private hospital cover this year
Key takeaways
- Almost 1 million Aussies will pay the MLS this financial year.
- Finder's MLS calculator shows how much money Australians could save at tax time.
- If an individual earns $200K, they could be charged $3,000 for not having private health cover.
One million Australians are expected to be hit with a surprise tax bill this EOFY, according to new research by Finder.
Finder analysis of Australians who will pay the Medicare Levy Surcharge (MLS) this financial year – a tax applied to higher-income earners who do not have private hospital cover – comes as the numbers keep creeping up.
Australian Taxation Office data shows 885,087 Australians paid the MLS in 2023-24, with Finder forecasting the figure will climb to around 1 million this year as more Australians are pushed above the income thresholds.
For the 2025–26 financial year, the surcharge applies to singles earning more than $101,000 and families earning more than $202,000, and is charged at between 1% and 1.5% of a person's entire taxable income.
For someone earning just above the threshold, that can mean an extra tax bill of around $1,000 or more when they lodge their return. If an individual earns $200K, they could be charged $3,000 for not having private health cover.
Ceyda Erem, health insurance expert at Finder, said many Aussies were in the dark on paying the surcharge.
"And here's the sting – it's charged on your whole income, not just the bit above the threshold. So for someone just over the line, that's around $1000 or more at tax time, and it only climbs from there.
"For most people paying the MLS, a basic hospital policy would cost less than the surcharge itself.
"So instead of paying a penalty for having nothing, you walk away with real health cover.
"And the sooner you sort it, the sooner you stop that surcharge clock ticking and set yourself up to dodge it next year too."
Ceyda said the taxable income for MLS purposes includes voluntary superannuation contributions and fringe benefits.
"This means your wage could be less than the income MLS threshold, but you still have to pay it."
Finder's Medicare Levy Surcharge (MLS) calculator shows how much money Australians could save at tax time when taking out private hospital cover before June 30.
Erem said Finder was on an EOFY mission to help Australians plug the MLS leak.
"Compare hospital cover on Finder, dodge the surcharge, and stack Finder Rewards on top."
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