Calculate your tax after medical aid credits
South Africa's medical aid tax credit is one of the most valuable but least understood tax benefits available to employed taxpayers. A family of four on medical aid saves R14,640 in tax every year — automatically, regardless of income. Yet many South Africans are either unaware of it, not claiming it correctly, or missing the additional credit for out-of-pocket expenses that could mean thousands more back from SARS.
This guide explains exactly what the medical aid tax credit is, how it is calculated, and how to make sure you are claiming every rand you are entitled to.
What Is the Medical Scheme Fees Tax Credit?
The Medical Scheme Fees Tax Credit is a monthly credit that directly reduces your income tax bill — rand for rand. Unlike a deduction which reduces your taxable income, a credit comes straight off your tax liability. The rates for the 2025/26 tax year are fixed amounts regardless of your income level.
| Dependant Status | Monthly Credit | Annual Credit |
|---|---|---|
| Principal member | R364 | R4,368 |
| First dependant | R364 | R4,368 |
| Each additional dependant | R246 | R2,952 |
| Family of 2 | R728 | R8,736 |
| Family of 4 | R1,220 | R14,640 |
💡 These are not small amounts. A family of four saves R14,640 per year in tax through the MTC alone. Make sure your employer has your correct dependant information to factor this into your monthly PAYE.
The Additional Medical Expenses Tax Credit
Beyond the MTC, you may also claim the Additional Medical Expenses Tax Credit for qualifying out-of-pocket medical costs not covered by your medical aid. For taxpayers under 65 with no disability, the formula is: claim 25% of the amount by which your qualifying out-of-pocket expenses exceed 7.5% of your taxable income.
| Taxpayer Type | Qualifying Threshold | Credit Rate |
|---|---|---|
| Under 65, no disability | Excess above 7.5% of taxable income | 25% of excess |
| 65 and older | Reduced threshold | 33.3% of excess |
| Person with disability (registered) | All qualifying expenses | 33.3% of all qualifying expenses |
A Real Calculation: What You Could Claim
Example: You earn R350,000 per year taxable income. Your medical aid co-payments and uncovered expenses for the year totalled R45,000. The threshold is 7.5% of R350,000 = R26,250. Excess = R45,000 minus R26,250 = R18,750. Your additional credit = 25% multiplied by R18,750 = R4,688. Combined with your standard MTC of R8,736 for you and a spouse, your total medical tax benefit is R13,424 for the year.
⚠️ Keep every receipt. SARS will ask for them during a verification or audit. Medical invoices, pharmacy slips, specialist accounts — anything paid out of pocket that was not reimbursed. A simple folder updated throughout the year takes minutes and could be worth thousands.
What Qualifies as a Medical Expense for the AMTC?
SARS has specific rules about what counts as a qualifying medical expense. Doctors, specialists, dentists, optometrists, audiologists, and physiotherapists registered with professional bodies generally qualify. Prescription medication from registered pharmacies qualifies. Hospital co-payments qualify.
Over-the-counter supplements and vitamins not specifically prescribed, cosmetic procedures, and non-prescription health products generally do not qualify. When in doubt, if a registered medical practitioner prescribed it, it is more likely to qualify.
Section 18A Disability: The Enhanced Benefit Most People Miss
If you or a registered dependant has a disability as defined by SARS, a far more generous tax treatment applies. You can claim 33.3% of all qualifying disability-related expenses — not just the excess above 7.5%. To qualify, you need a completed ITR-DD form signed by a registered medical practitioner confirming the disability.
This enhanced credit can be substantial. A taxpayer with a visually impaired dependant spending R80,000 per year on disability-related expenses would receive a credit of R26,664, which can represent a meaningful portion of their annual tax bill.
How to Claim on Your SARS Tax Return
Your medical aid sends you an IT3(f) tax certificate every year showing total contributions. Use this for the MTC section of your ITR12. For additional expenses, add up all qualifying out-of-pocket costs for the year, apply the formula, and enter the amount. SARS pre-populates some fields from the IT3(f) — verify these are correct before submitting.
If your employer already applies the MTC through your PAYE, you may see little additional refund from this. But if you have significant out-of-pocket expenses, the AMTC is a separate claim that can generate a meaningful refund. File early in July when SARS processes returns faster.
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If you're self-employed and pay your own medical aid contributions, the MTC works slightly differently for you than for salaried employees. You claim the full annual credit amount on your ITR12 return rather than having it applied monthly through PAYE. This means you see the benefit as a lump sum reduction in your annual tax liability — which is actually advantageous for cash flow planning.
For provisional taxpayers, you can factor the MTC into your estimated tax liability when calculating your IRP6 payments. On your 2nd provisional payment estimate, subtract the annual MTC (R364 × 12 = R4,368 for a single member, R8,736 for a member plus one dependant) from your estimated annual tax liability before paying. This reduces your provisional payments and avoids overpaying SARS.
⚠️ If you're self-employed and your spouse is on a separate employer's medical aid, you cannot claim MTC for their contributions on your own return. Each principal member claims the credits for the contributions made under their own policy name. Combining policies incorrectly is one of the most common errors SARS flags during verification.
How to Check If Your Employer Is Applying Your MTC Correctly
Many employees assume their employer handles everything — and most do. But errors happen. The easiest check: look at your IRP5 certificate (issued at tax year end). Code 4005 shows your total medical aid contributions for the year. Code 4116 shows the MTC that was applied. Divide code 4005 by 12 to get your monthly contribution, then check if code 4116 matches the correct MTC rate for your number of dependants.
A family of three (principal member, spouse, one child) should have code 4116 showing R12,192 for the year (R364 + R364 + R246) × 12 = R11,688/year minimum. If your code 4116 is significantly lower, your employer may have the wrong dependant count on file. Contact your HR department or payroll provider with your medical aid certificate showing registered dependants.
| Dependants Registered | Monthly MTC | Annual MTC (code 4116) |
|---|---|---|
| Member only | R364 | R4,368 |
| Member + spouse | R728 | R8,736 |
| Member + spouse + 1 child | R974 | R11,688 |
| Member + spouse + 2 children | R1,220 | R14,640 |
| Member + spouse + 3 children | R1,466 | R17,592 |
If you discover an underapplication, you can correct it on your annual ITR12 return by claiming the full amount you're entitled to. SARS will recalculate and the difference typically comes back as a refund. File early in tax season (opening July 2026) to receive any refund faster.
What Happens to Your Medical Aid Tax Credit Between Jobs?
If you resign, get retrenched, or take a career break, your medical aid membership status changes — and so does how your MTC is handled. If you remain on the same medical aid as a self-paying member (no longer employer-subsidised), the MTC still applies. You're still a registered principal member. You claim the full annual MTC on your ITR12 return.
If you leave your employer's group medical aid and take a gap in coverage, you lose the MTC for any months you're not a registered member. SARS calculates the credit on a pro-rata monthly basis based on the months of membership confirmed by your IT3(f) certificate. Three months off medical aid in a tax year means 9 months of MTC — not 12.
For retrenched workers specifically: if you can afford to maintain medical aid membership during your job search period, it preserves both your MTC entitlement and your continuous membership benefits (most medical aids have waiting periods for new members or those with breaks in cover). The cost of maintaining membership may be partially offset by the MTC you'd otherwise lose — factor this into your post-retrenchment budget calculation.
Frequently Asked Questions
The Medical Scheme Fees Tax Credit is a credit that directly reduces your income tax bill. For 2025/26, the credit is R364 per month for the main member, R364 for the first dependant, and R246 for each additional dependant. A family of four saves R1,220 per month in tax regardless of their income level.
A deduction reduces your taxable income and its value depends on your tax rate. A credit directly reduces your tax bill by a fixed rand amount. A taxpayer in the 18% bracket and one in the 40% bracket both save the same R364 per month from the MTC.
Yes, through the Additional Medical Expenses Tax Credit. For taxpayers under 65, you can claim 25% of qualifying out-of-pocket expenses that exceed 7.5% of your taxable income. The threshold is lower and the rate more generous for taxpayers over 65 and those with disabilities.
Your employer factors the MTC into your monthly PAYE calculation if they know your dependants. If your employer does not have your correct dependant information, or if you have out-of-pocket expenses, you need to claim the additional credit on your annual SARS tax return.
Qualifying expenses include co-payments and out-of-pocket payments to doctors, specialists, dentists, optometrists, physiotherapists, and pharmacists that are not reimbursed by your medical aid. Cosmetic procedures and non-prescribed supplements generally do not qualify.
On your ITR12 SARS return, use the medical expenses section. Your medical aid sends you a tax certificate at year end showing total contributions — use this for the MTC. For additional expenses, you claim the amount exceeding 7.5% of taxable income. Keep all receipts.
The MTC rates for 2025/26 are R364 per month for the principal member, R364 per month for the first dependant, and R246 per month for each additional dependant. These rates typically increase slightly each year.
If you are a dependant on your spouse's medical aid, the principal member claims all the credits for all dependants. You cannot each claim separately. Only the person whose name the medical aid policy is registered under can claim the MTC.
Related Reading
→ South African Tax Refund 2026: How to Claim from SARS→ Provisional Tax South Africa 2026→ South African Tax Brackets 2026 Explained→ UIF South Africa 2026: Full Guide→ How Much Should You Have Saved by Age?→ TFSA South Africa: Complete 2026 Guide