M2 Medicare levy surcharge 2025

Things you need to know

This question is compulsory.

The Medicare levy surcharge (MLS) is in addition to the Medicare levy. Depending on your income for MLS purposes, the MLS rate is 1%, 1.25% or 1.5% of:

• your taxable income
• your total reportable fringe benefits
• any amount on which family trust distribution tax has been paid.

Medicare levy surcharge income testing

We income test the MLS against the following income tier thresholds.

Income thresholds

Threshold	Base tier	Tier 1	Tier 2	Tier 3
Single threshold	$97,000 or less	$97,001–$113,000	$113,001–$151,000	$151,001 or more
Family threshold	$194,000 or less	$194,001–$226,000	$226,001–$302,000	$302,001 or more
Medicare levy surcharge	0%	1%	1.25%	1.5%

Note: The family income threshold increases by $1,500 for each MLS dependent child after the first child.

You may have to pay MLS for any period during the income year when both of the following apply:

• you, your spouse, or any of your dependants don't have an appropriate level of private patient hospital cover
• your income for MLS purposes is above the threshold.

Appropriate level of private patient hospital cover

An appropriate level of private patient hospital cover is cover a registered health insurer provides for hospital treatment in Australia which has an excess of either:

• $750 or less (for a policy covering only one person)
• $1,500 or less (for all other policies).

Excess is the amount you pay before your health insurer pays for any claim you make.

General cover (formerly called ancillary cover) or 'extras' isn't private patient hospital cover because it covers only items such as optical, dental, physiotherapy or chiropractic treatment.

If you have health cover but aren't sure whether it is at the appropriate level, ask your registered health insurer.

Income for MLS purposes

Your income for MLS purposes is your taxable income (excluding any assessable first home super saver released amount) plus the following if they apply to you:

• reportable fringe benefits (on your income statement or payment summary)
• reportable super contributions (which is the total of both your reportable employer super contributions and your deductible personal super contributions)
• your net investment loss (which is the amount by which your financial investment deductions exceed your financial investment income, plus the amount by which your rental property deductions exceed your rental property income)
• the amount on which family trust distribution tax has been paid.

Dependants

For this question, your dependants (regardless of their income) are your:

• spouse, even if they work during 2024–25, or have their own income
• children under 21 years old
• children 21 to 24 years old who are studying full time at school, college or university.

Dependants must be Australian residents and you must contribute to their maintenance.

Your spouse includes another person who:

• you're in a relationship with that is registered under a prescribed state or territory law
• although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple.

The definition of child includes:

• a child born or adopted in 2024–25
• someone who is a child of the individual within the meaning of the Family Law Act 1975.

If you and all your dependants, including your spouse, have an appropriate level of private patient hospital cover for the whole of 2024–25, go to Step 1. Otherwise, read on.

If you aren't sure whether you have an 'appropriate level of private patient hospital cover' during 2024–25, contact your health insurer. You can also ask your health insurer for a statement showing the number of days you and all your dependants have an appropriate level of health cover.

If you would like to work out the amount of MLS you have to pay, use the Income tax estimator.

What you need to answer this question

If you don't have an appropriate level of private patient hospital cover, you may be liable for MLS. Whether or not you're liable to pay MLS depends on both of the following:

• your income for MLS purposes
• your combined income for MLS purposes, if you have a spouse in 2024–25 or if your spouse dies in 2024–25.

Complete Worksheet 1 to work out your and your spouse's income (if relevant) for MLS purposes.

If you have exempt foreign employment income, and your taxable income is $1 or more, add your exempt foreign income to your taxable income, and write the total at Worksheet 1 – row a.

If you don't have a spouse, go to Medicare levy surcharge exemption after you complete Worksheet 1.

If your spouse is under a legal disability, write at row h in the spouse column your spouse's net income from a trust for which the trustee is liable to pay tax. Examples of a legal disability include being:

• bankrupt
• a person who is declared legally incapable because of a mental condition
• under 18 years old on 30 June 2025.

Don't include any amount that you already include in your spouse's taxable income at row a.

Write at row c the total amount of distributions to you or your spouse:

• on which family trust distribution tax has been paid, and
• which you or your spouse would have to show as assessable income if the tax had not been paid.

Worksheet 1: Working out income for MLS purposes

Row	Working out income for MLS purposes	You	Spouse
a	Taxable income from Taxable income or loss (excluding any assessable first home super saver released amount).	$	$
b	Total reportable fringe benefits amount (the sum of question IT1 – labels N and W).	$	$
c	Amount on which family trust distribution tax has been paid (from question A5 – label X in the supplementary tax return).	$	$
d	Net financial investment loss (from question IT5 – label X).	$	$
e	Net rental property loss (from question IT6 – label Y).	$	$
f	Reportable employer super contributions (from question IT2 – label T).	$	$
g	Deductible personal super contributions (from question D12 – label H in the supplementary tax return).	$	$
h	Your spouse's share of the net income of a trust on which the trustee must pay tax (from Spouse details – label T).	n/a	$
j	Add the amounts from row a to row h in each column.	$	$

Your income for MLS purposes when you're single is the amount at row j in your column.

Your combined income for MLS purposes is the amount from row j in your column and the amount from row j in your spouse's column.

Medicare levy surcharge exemption

If you fit in one of the following categories, you're exempt from MLS for the whole of 2024–25.

Surcharge exemption categories

• For the whole of 2024–25, you and all of your dependants (if you have any), either
  • have an appropriate level of private patient hospital cover
  • are in a Medicare levy exemption category (see question M1).
• You're single for the whole of 2024–25, and
  • you don't have any dependent children for the whole of 2024–25
  • your income for MLS purposes is $97,000 or less.
• You're single for the whole of 2024–25, and
  • have a dependent child for the whole of 2024–25
  • your income for MLS purposes is $194,000 or less (plus $1,500 for each dependent child after the first).
• You're single for part of 2024–25, and
  • you don't have a dependent child for the for the whole of 2024–25
  • your spouse didn't die during the year
  • your income for MLS purposes is $97,000 or less.
• You have a spouse (with or without dependent children) for the whole of 2024–25, and your combined income for MLS purposes is either
  • $194,000 or less (plus $1,500 for each dependent child after the first)
  • greater than $194,000 (plus $1,500 for each dependent child after the first) but your own income for MLS purposes is $27,222 or less.

If your spouse dies during 2024–25 and you don't have another spouse on or before 30 June 2025, assume that you have a spouse for the whole of 2024–25 when you work out your MLS income.

Lump sum payment in arrears in spouse's supplementary tax return

If you're liable for MLS only because your spouse shows a lump sum payment in arrears at question 20 Foreign source income and foreign assets or property or question 24 Other income in their supplementary tax return, you may be entitled to a tax offset up to the amount of MLS you have to pay. We will calculate the tax offset for you.

You'll need to provide additional information.

If you're lodging a paper tax return:

• write on a separate piece of paper
  • the heading Schedule of additional information – question M2
  • your name, address, TFN and the name and address of your spouse
  • details that your spouse receives a lump sum payment in arrears
• attach your schedule of additional information to your tax return
• print X in the Yes box at Taxpayer's declaration in your tax return.

Income threshold when your circumstances change during the year

If you have a new spouse, you separate from your spouse, or you become or cease to be a sole parent, both the single and the family surcharge thresholds may apply to you for different periods. Special rules apply to calculate MLS for these periods.

You need to work out whether you're liable for MLS for any period during 2024–25 that you:

• are single (that is, you have no spouse or dependent children) so you can apply the single surcharge threshold of $97,000 to your income for MLS purposes
• have a spouse or any dependent children, so you can apply the family surcharge threshold of $194,000, plus $1,500 for each dependent child after the first, to your income for MLS purposes.

We will calculate the rate of your MLS liability using either:

• your combined family income using the relevant family income threshold if you have a spouse on 30 June 2025
• your own income using the relevant single income threshold if you're single on 30 June 2025.

You're liable for MLS for the number of days you're single if both of the following apply:

• your own income for MLS purposes is more than $97,000
• you don't have appropriate private patient hospital cover or aren't in a Medicare levy exemption category.

You're liable for MLS for the number of days you have a spouse or dependent children, if both of the following apply:

• your own income for MLS purposes is more than $194,000 (plus $1,500 for each dependent child after the first one)
• you, or your spouse, or a dependent child either
  • don't have an appropriate level of private patient hospital cover
  • aren't in a Medicare levy exemption category.

To help you work out whether you're liable for MLS for the different periods, see the examples.

Part year private patient hospital cover

If you're single and take out private patient hospital cover during the year, use the following example to help you work out how many days you're liable to pay MLS.

Family cover for part of the year

If some members of your family have cover for only part of the year, use the following example to help you work out how many days you're liable to pay MLS.

Completing your tax return

To complete this question, follow the steps.

Step 1

If you and all your dependants (including your spouse) have an appropriate level of private patient hospital cover for the whole of 2024–25, print X in the Yes box at the right of question M2 – label E. Make sure you also complete your Private health insurance policy details. You have finished this question.

If you or any of your dependants (including your spouse) don't have private patient hospital cover or only have cover for part of the year, print X in the No box question M2 – label E.

Step 2

If you're in an exemption category (see, Surcharge exemption categories) for the whole of 2024-25, print X in the Yes box to the left of 'You don't have to pay the surcharge.' and write 365 at question M2 – label A. You have finished this question. Go to Private health insurance policy details 2025.

If you aren't in an exemption category, print X in the No box to the left of 'You may have to pay the surcharge.'

Step 3

Write at question M2 – label A the number of days for which you don't have to pay MLS.

If you don't have to pay MLS for any days during the period 1 July 2024 to 30 June 2025, write 365 at question M2 – label A.

If you need to pay MLS for:

• the whole period 1 July 2024 to 30 June 2025, write 0 (zero) at question M2 – label A
• part of the period 1 July 2024 to 30 June 2025, write at question M2 – label A the number of days for which you don't have to pay MLS.

Step 4

Write the number of dependent children you have during 2024–25 at question IT8 – label D.

Complete Income tests.

Step 5

If you have a spouse during 2024–25 and you or any of your dependants (including your spouse) aren't covered by private patient hospital cover for the full income year, complete Spouse details – married or de facto.

Where to go next

• Go to Private health insurance policy details 2025.
• Return to main menu Individual tax return instructions 2025.
• Go back to question M1 Medicare levy reduction or exemption 2025.