The Medicare levy is an amount paid by Australian taxpayers in addition to the tax they pay on their taxable income. The levy helps fund some of the costs of Australias public health system known as Medicare. The Medicare levy is currently set at 2% of taxable income. Most Australian taxpayers pay the Medicare levy, but some may be eligible for a reduction or exemption based on their income and circumstances. The Medicare levy is calculated when taxpayers lodge their income tax return. Employers generally withhold an amount from employees salary or wages to cover the Medicare levy. Taxpayers can use the Medicare levy calculator to work out their Medicare levy.

The Medicare levy surcharge (MLS) is a separate levy paid by Australian taxpayers who do not have private hospital cover and who earn above a certain income. The surcharge aims to encourage individuals to take out private hospital cover and use the private system to reduce the demand on the public Medicare system. The surcharge is calculated at the rate of 1% to 1.5% of income for MLS purposes, in addition to the Medicare Levy of 2%. Taxpayers can refer to the Australian Taxation Offices Private Health Insurance Rebate Calculator or contact the ATO directly to work out their annual income for MLS and Rebate purposes.