Medical aid & tax: how to get more back from SARS

If you pay for medical aid, you are entitled to a tax break. However, it's one of the most commonly misunderstood parts of the South African tax system.

The most important thing to know is that it’s a tax credit, not a deduction. This is great news.

• A deduction reduces your taxable income.
• A credit directly reduces the final tax you have to pay, rand-for-rand. It's a direct discount on your tax bill.

The medical claim is split into two parts: a fixed credit for your monthly contributions (MTC) and a more complex credit for your "out-of-pocket" expenses (AMTC).

Part 1: The Medical Scheme Fees Tax Credit (MTC)

This is the simple, automatic credit you get just for being an active member of a medical scheme.

For the 2026 tax year (1 March 2025 - 28 February 2026), the fixed monthly credits are:

• R364 for you (the main member)
• R364 for the first dependant
• R246 for each additional dependant

Example:

You pay for a medical aid policy for yourself, your spouse, and your two children (a total of 4 people).

• Your monthly credit is: R364 (you) + R364 (spouse) + R246 (child 1) + R246 (child 2) = R1,220 per month.
• Your total annual credit is: R1,220 x 12 = R14,640.
• This R14,640 will be directly subtracted from your total tax bill for the year.

Your medical aid scheme sends this information to SARS, so it's usually pre-populated on your tax return.

Part 2: The Additional Medical Expenses Tax Credit (AMTC)

This is the complicated one, but it's where you can get a lot more money back.

The AMTC is a credit for "out-of-pocket" medical expenses. These are qualifying medical expenses that your medical aid did NOT pay for. This includes things like:

• Doctors' consultation fees that you paid from your own pocket.
• Medicines and prescriptions from a pharmacy (that weren't covered by your savings).
• Services from specialists (dentists, optometrists, physiotherapists) that you paid for yourself.

The calculation for this credit is complex and depends on your age and disability status.

Formula 1: For Taxpayers UNDER 65 (No Disability)

This formula has a high threshold, meaning you have to spend a lot to get a little back.

Use our AI to maximise your tax refund - we'll sort out SARS

Get started for free with AIFile with a tax specialist

1. First, find your "excess contributions":
   • Take your Total Medical Aid Contributions for the year.
   • Subtract (4 x your Total MTC).
2. Then, calculate your total medical spend:
   • Add your Excess Contributions (from Step 1).
   • Add all your Out-of-Pocket Expenses.
3. Finally, find the credit:
   • Take your Total Medical Spend (from Step 2).
   • Subtract 7.5% of your Taxable Income.
   • You get a credit of 25% of this final positive amount.

Simplified: For most people, you only get a credit if your total out-of-pocket costs are very high (more than 7.5% of your annual income).

Formula 2: For Taxpayers 65+ OR with a Disability

If you are 65 or older, or if you, your spouse, or your child has a qualifying disability (registered with SARS via an ITR-DD form), the formula is much more generous.

1. First, find your "excess contributions":
   • Take your Total Medical Aid Contributions for the year.
   • Subtract (3 x your Total MTC).
2. Then, find the credit:
   • Add your Excess Contributions (from Step 1).
   • Add all your Out-of-Pocket Expenses.
   • You get a credit of 33.3% of this final amount.

Notice the difference? The 7.5% income threshold falls away, and the credit percentage is higher (33.3% vs. 25%). This means taxpayers over 65 or with a registered disability get a much larger and more direct benefit from their out-of-pocket costs.

What You Must Do

• Keep Every Slip: Keep all invoices from doctors and all pharmacy slips for prescriptions.
• Track Everything: You must add up all these qualifying costs to claim them on your ITR12.

File Your Return: Even if you earn below the threshold, you must file a return to get your medical credits back as a refund.

Disclaimer:This article is for informational purposes only and does not constitute financial or tax advice. Tax laws are complex and subject to change. We strongly recommend consulting with a registered tax practitioner to address your specific circumstances. TaxClaw.ai is a tool to assist you in managing your tax obligations and is not a substitute for professional advice.