Big tax time change coming — what you need to know if you’re earning over $105k
Key takeaways
- On July 1, the Medicare Levy Surcharge (MLS) thresholds are increasing for singles and families/couples.
- The MLS is an extra 1% to 1.5% tax paid by those earning over a certain threshold who don’t hold hospital cover.
- What’s next: Find out if you’ll be impacted by the new MLS thresholds by using Finder’s new MLS calculator.
If you've recently had a bump in your salary or have been earning over $105k for a while, listen up.
The income thresholds that determine who pays the Medicare Levy Surcharge (MLS) are shifting for the 2026–27 financial year.
From 1 July 2026, the surcharge kicks in for singles earning above $105,001, up from $101,000 in 2025–26. For couples and families, the new threshold is $210,001, compared to $202,000 last year.
Why does that matter?
Well, the increase means some Australians who were caught last year may no longer be, but for anyone who's had a pay rise, the opposite could also be true.
The MLS is an additional 1% to 1.5% tax high income earners must pay if they don't have hospital cover.
The purpose of the MLS is to encourage high earning Aussies to purchase private health insurance and reduce the burden on the public health system.
The only way to avoid the MLS as a high income earner is to purchase private hospital cover.
Is getting private health insurance actually cheaper than paying the MLS?
Well, it depends.
For many people over the new $105k threshold, a basic hospital policy may cost less than the surcharge itself.
Basic hospital cover starts from around less than $20 a week. And with EOFY right around the corner, you might even be able to snag a decent sign up offer when you join.
So, how can you know for sure if you'll be hit with the MLS this financial year?
Have a go at Finder's new Medicare Levy Surcharge calculator. Simply plug in your income and you'll see what you'd owe in tax and whether a basic policy would save you money.
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