Medical aid is expensive in South Africa, and most taxpayers know they get some tax relief for it. But the details trip people up — especially the difference between a tax credit (which reduces your tax directly) and a tax deduction (which reduces your taxable income). South Africa moved from deductions to credits for medical aid years ago, and the distinction matters enormously for how much you actually save.

Medical Aid Tax Credits: The Basics

Since 2012, SARS replaced the old medical deduction system with Medical Tax Credits (MTCs). Instead of reducing your taxable income, MTCs reduce your tax liability directly — rand for rand. This is actually more equitable than deductions: under the old system, high earners saved more (because a deduction is worth more at a higher marginal rate). Credits give every taxpayer the same rand value per member.

For the 2026/27 tax year, the monthly credit amounts are:

A family of four — principal member, spouse, and two children — earns monthly credits of R364 + R364 + R246 + R246 = R1,220/month, or R14,640 per year. This amount is deducted directly from your tax bill.

How Credits Actually Reduce Your Tax

Credits come off your tax liability after it's calculated. Here's a simple example: Thabo earns R450,000 per year. His income tax before rebates is approximately R111,000. After the primary rebate of R17,820, his liability is R93,180. He's on a hospital plan covering himself and his spouse — so his annual MTC is R364 × 2 × 12 = R8,736. His final tax bill is R93,180 − R8,736 = R84,444.

The credit delivers the same R8,736 saving regardless of whether Thabo is in the 26% or 36% bracket — that's the point of credits. Under the old deduction regime, a 36% taxpayer would have saved roughly 40% more from the same medical contribution than a 26% taxpayer.

Additional Medical Expense Credits (Section 6B)

Beyond the flat monthly credits, SARS allows an additional medical expenses tax credit for qualifying out-of-pocket medical costs. This is where it gets more nuanced.

The additional credit applies to qualifying medical expenses not covered by your medical aid, plus any medical aid contributions that exceed a certain threshold. The calculation differs depending on whether you are under 65 or over 65, and whether you or a dependant has a disability.

For Taxpayers Under 65 (No Disability)

The additional credit equals 25% of the amount by which qualifying expenses exceed 7.5% of taxable income. Qualifying expenses include:

• Out-of-pocket medical costs not refunded by medical aid (e.g. specialist co-payments, dental, optometry)
• Medical aid contributions that exceed 4× the monthly MTC for you and your dependants
• Prescription medicines with a valid prescription
• Disability-related expenses (if applicable — higher relief available)

The 7.5% threshold is significant. If your taxable income is R500,000, you must have qualifying expenses exceeding R37,500 before the additional credit kicks in. For most people without major medical bills, the flat monthly credits are the primary relief.

For Taxpayers 65 and Older, or Those with a Disability

If you are 65 or older, or you or a dependant has a disability (as defined by SARS and confirmed by an ITR-DD form), the additional credit calculation is more generous: 33.3% of qualifying expenses (no 7.5% threshold floor). This reflects the higher medical costs typical in these situations.

What Counts as a "Qualifying Medical Expense"?

SARS is specific about what qualifies. The following generally qualify:

• Amounts paid to a registered medical practitioner, specialist, dentist, optometrist, physiotherapist, or psychologist
• Prescription medication (must have a valid prescription — over-the-counter doesn't qualify)
• Medical aid contributions for you and your tax dependants
• Costs of a wheelchair, hearing aid, prosthesis, or similar disability device
• Costs of modifying a home or vehicle for a disabled person

The following do not qualify:

• Gym memberships or wellness programmes (even if doctor-recommended)
• Vitamins and supplements without a prescription
• Cosmetic procedures not medically necessary
• Costs covered and reimbursed by medical aid (you can only claim the gap)
• Medical travel costs (in most cases)

Worked Example: Additional Credit Calculation

Lerato earns R650,000 per year and has a medical aid for herself and her child. Her monthly MTC is R364 + R246 = R610, or R7,320 per year. She paid R22,000 in out-of-pocket specialist fees and dentist costs not covered by her medical aid.

• 7.5% threshold: 7.5% × R650,000 = R48,750
• Her qualifying expenses (R22,000) do not exceed R48,750
• Additional credit: R0 — the expenses are below the threshold
• She does get her R7,320 flat credits regardless

If Lerato had R60,000 in qualifying expenses instead, the calculation would be: (R60,000 − R48,750) × 25% = R11,250 × 25% = R2,812.50 additional credit. Combined with her flat credits, her total medical tax relief would be R10,132.50.

Employer vs Self-Paid Medical Aid Contributions

If your employer pays your medical aid premiums (common in formal employment), the credits still accrue to you — but there's a fringe benefit consideration. The employer contribution is a taxable fringe benefit added to your remuneration. This effectively means you pay income tax on what the employer contributes, then get the MTC back. The net effect is complicated, but the MTC still provides genuine relief.

If you pay your own contributions (self-employed or top-up contributions), they reduce your taxable income via the credit mechanism. Make sure your payslip correctly reflects both the employer and employee portions if you're salaried.

How to Claim on Your ITR12

Your medical aid scheme issues a tax certificate (usually by end of May) showing your total contributions and any amounts claimed from the scheme. You enter this on your ITR12. SARS pre-populates some of this data from the scheme's submissions, but always verify it matches your certificate. Additional out-of-pocket expenses go in the "additional medical expenses" section — keep all receipts and doctor's invoices for at least five years.

Medical Credits and the Tax Threshold

If your income is below the tax threshold (roughly R95,750 for under-65s in 2026/27 after the primary rebate), you pay no tax and therefore cannot use the medical credit — credits cannot create a refund, they can only reduce a tax liability to zero. Low-income earners on medical aid unfortunately don't benefit from this mechanism. This is a known inequity in the system.

Key Takeaways

• Medical tax credits are fixed rand amounts per member — not percentage deductions
• For 2026/27: R364/month for first two members, R246/month for each additional
• Additional credits for qualifying out-of-pocket expenses above 7.5% of taxable income (under 65)
• Over-65s and those with disabilities get more generous additional credit treatment
• Keep all medical receipts — you'll need them if SARS queries your claim
• Credits reduce tax, not income — they deliver the same value regardless of your tax bracket

Use the BleedRate calculator to see your exact medical tax credit for 2026/27 based on your family size and income.