How Medical Tax Credits Work
South Africa moved from a medical deduction (which reduced taxable income) to a medical tax credit (which reduces the tax you owe) in 2014. The credit system is more equitable because it provides the same rand benefit regardless of your tax bracket.
For the 2025 year of assessment, the Medical Tax Credit (MTC) rates are:
| Beneficiaries | Monthly Credit |
|---|---|
| Main member (yourself) | R364 |
| First dependant | R364 |
| Each additional dependant | R246 |
So a family of four (main member + 3 dependants) would receive:
- 2 × R364 = R728 for the first two members
- 2 × R246 = R492 for the additional two members
- Total: R1,220 per month = R14,640 per year
This credit is subtracted directly from your tax liability — not from your taxable income.
The Additional Medical Expense Credit
Beyond the basic MTC, taxpayers can claim an additional medical expense credit for:
- Out-of-pocket qualifying medical expenses — amounts you paid that were not reimbursed by your scheme
- Contributions to a medical scheme in excess of 4× the annual MTC
The additional credit is calculated as follows:
For taxpayers under 65 without a disability:- 25% of the amount by which (out-of-pocket expenses + excess contributions) exceeds 7.5% of taxable income
- 33.3% of all qualifying medical expenses (no 7.5% threshold applies)
What Qualifies as a Medical Expense?
Qualifying medical expenses include:
- Payments to a registered medical practitioner, dentist, optometrist, physiotherapist, or specialist
- Prescription medicines
- Medical equipment prescribed by a practitioner
- Costs of a guide dog for a visually impaired person
- Costs of a hearing aid
- Hospital costs not covered by the scheme
- Gym membership (even if doctor-recommended)
- Vitamins and supplements (unless prescribed)
- Cosmetic procedures
- Medical scheme contributions paid by your employer (these are already factored into the basic MTC)
The Disability Enhancement
If you or a dependant on your medical plan has a disability as defined by SARS, the tax treatment is significantly more favourable:
- The 7.5% threshold does not apply
- 33.3% of ALL qualifying medical expenses become a credit
- This includes scheme contributions, out-of-pocket expenses, and disability-related costs
To claim disability status, a completed ITR-DD form (Confirmation of Diagnosis of Disability) must be signed by a registered medical practitioner and submitted to SARS. The form must be renewed periodically.
Practical Example
Consider a taxpayer with:
- Taxable income: R480,000
- Medical scheme: main member + 2 dependants
- Monthly scheme contribution: R4,500 (R54,000/year)
- Out-of-pocket expenses: R8,000
- 2 × R364 × 12 = R8,736
- 1 × R246 × 12 = R2,952
- Total basic MTC = R11,688
- Annual MTC = R11,688; 4× MTC = R46,752
- Excess contributions = R54,000 − R46,752 = R7,248
- Total qualifying = R7,248 + R8,000 = R15,248
- 7.5% of taxable income = R36,000
- R15,248 < R36,000, so no additional credit applies
This illustrates why many taxpayers with moderate incomes and standard medical aid plans receive no additional credit beyond the basic MTC. The 7.5% threshold is a high bar.
How to Claim on Your ITR12
- Obtain your medical scheme tax certificate (the scheme must issue this by 31 May)
- Declare the total contributions on your ITR12
- Declare the number of beneficiaries (this determines your basic MTC)
- Declare any out-of-pocket qualifying expenses
- If you have a disability, ensure the ITR-DD is on file with SARS
Sources: SARS Medical Tax Credit Guide | Income Tax Act s6A and s6B
