General information only. We're registered tax agents, not health insurance advisers, so this isn't advice about whether to take out private health insurance or which policy suits you. Check your cover with your insurer or at privatehealth.gov.au.
Thresholds for 2025–26 (1 July 2025 to 30 June 2026)
| No surcharge | 1% | 1.25% | 1.5% | |
|---|---|---|---|---|
| Single | $101,000 or less | $101,001 – $118,000 | $118,001 – $158,000 | $158,001 or more |
| Family | $202,000 or less | $202,001 – $236,000 | $236,001 – $316,000 | $316,001 or more |
Thresholds for 2026–27 (1 July 2026 to 30 June 2027)
| No surcharge | 1% | 1.25% | 1.5% | |
|---|---|---|---|---|
| Single | $105,000 or less | $105,001 – $123,000 | $123,001 – $164,000 | $164,001 or more |
| Family | $210,000 or less | $210,001 – $246,000 | $246,001 – $328,000 | $328,001 or more |
The family thresholds go up by $1,500 for each dependent child after the first.
Single or family?
- You use the family thresholds if you have a spouse (married or de facto, any gender), or dependent children you help support. Single parents use the family thresholds too.
- Dependent children are under 21, or 21 to 24 and studying full-time. Foster children don't count.
- For families, your income and your spouse's income are added together and tested against the family threshold.
- If your own income is very low (at or under the Medicare levy low-income threshold), you don't pay the surcharge even if your family's income is over the threshold.
- If you got together, separated or had your first child during the year, the single and family thresholds can each apply for part of the year. We'll work it out with you.
What counts as income for the surcharge
- Your taxable income.
- Reportable fringe benefits, for example from salary packaging.
- Net rental property and investment losses. Negative gearing reduces your tax, but not your income for the surcharge.
- Reportable super contributions: salary sacrifice, and personal super contributions you claim as a deduction.
So your income for the surcharge can be over the threshold even when your taxable income isn't.
How it's worked out
- The rate (1%, 1.25% or 1.5%) depends on which tier your income for MLS purposes falls in.
- The rate is then applied to your taxable income plus reportable fringe benefits (not the other add-backs).
- Example (from the ATO, 2026–27): Tom is single with no hospital cover. His taxable income is $90,000 and his reportable fringe benefits are $27,000, so his income for MLS purposes is $117,000. That's tier 1, so he pays 1% of $117,000: $1,170.
- You only pay for the days you weren't covered. Covered for half the year? You pay about half the surcharge.
What cover counts
- Private patient hospital cover from a registered Australian health insurer.
- The excess must be $750 or less for singles, or $1,500 or less for couples and families.
- Everyone counts: you, your spouse and your dependent children all need to be covered for you to avoid the surcharge.
- Extras-only cover (dental, optical, physio) doesn't count. Neither does travel insurance, or cover from an overseas fund.
- Cancelling or suspending hospital cover while you're overseas can mean you pay the surcharge for that time.
Check your cover
Not sure whether your policy counts, or what your excess is? Look up your policy, or compare policies, on the Australian Government's private health insurance website, privatehealth.gov.au. Each policy has a standard information statement there showing its hospital cover and excess. Your insurer can also confirm it.
Taking out hospital cover after you turn 31 can also mean a Lifetime Health Cover loading on your premiums. That's separate from the surcharge, and privatehealth.gov.au explains how it works.
How we can help
When we do your tax return, we check your income for MLS purposes, your family situation and the days you were covered, so the surcharge is right (or not charged at all). Tell us about your spouse and dependants, and send us your private health insurance statement if you have one. Clients can also estimate the surcharge with the tax calculator under Tools in the client portal.
General information only. We're registered tax agents, not health insurance advisers, so this isn't advice about whether to take out private health insurance or which policy suits you. Check your cover with your insurer or at privatehealth.gov.au.