This is article two discussing the updated Medical Tax Credits Guide, Issue 18, of June 2026. Please read part one before proceeding with this article.
Medical scheme fees tax credit (MTC)
The MTC is set at a fixed amount per month. Since the MTC is a “rebate” and not a “deduction”, it is not refundable and cannot exceed the amount of normal tax payable. This is because the MTC is limited to the tax payable before the offset of employees’ tax and provisional tax. Any excess that is not allowed as a rebate in the current year of assessment cannot be carried forward to any subsequent year of assessment.
The amount of the medical scheme fees tax credit to be deducted from tax due is the MTC for the year of assessment commencing on or after 1 March 2025:
- R364 in respect of benefits to the taxpayer or in respect of a member of a registered medical scheme or a dependant of that member, where the taxpayer is not a member of a medical scheme or fund;
- R728 in respect of benefits to the taxpayer and one dependant; or
- R728 in respect of benefits to two dependants; and
- R246 in respect of benefits for every additional dependant for each month in that year of assessment for which contributions are paid.
If the taxpayer is not a member of a registered medical scheme but pays fees for a dependant person, and that dependant person is a member of a registered medical scheme or fund, the MTC of R364 referred to above would also be allowed in the taxpayer’s hands. An example of such a case might be where the taxpayer pays fees in respect of a parent that is dependent on him or her.
Example – Effect of MTC on tax payable
Facts:
For the 2026 year of assessment, LM (aged 47) paid R1 700 per month in contributions and did not incur any other medical expenses during the year. LM’s taxable income for the 2026 year of assessment is R160 000. LM is the main member of the medical scheme and has one dependant registered on that scheme.
Result:
MTC calculation
Total contributions: R1 700 × 12 R20 400
MTC: Member and one dependant = R728 per month, thus R728 × 12 months = R8 736 maximum rebate for the year of assessment.
Calculation of net normal tax
Normal tax on R160 000 (at 18%) R28 800
Less: Primary rebate (R17 235)
———
R11 565
Less MTC (R8 736)
———
Net normal tax due R2 829
Example – MTC may NOT create a refund.
Facts:
For the 2026 year of assessment, BA (aged 52) paid R3 500 per month for 10 months in contributions and did not incur any other medical expenses during the year. BA’s taxable income is R130 000 for the 2026 year of assessment. BA is the main member of the medical scheme and has two dependants registered on that scheme.
Result:
Contributions paid to the medical scheme R35 000
MTC calculation
Member and two dependants: R728 + R246 = R974 per month × 10 months = R9 740 maximum MTC rebate
Calculation of Net Normal Tax
Normal tax on R130 000 (at 18%) = R23 400
Less: Primary rebate (R17 235)
———
R6 165
Less MTC R9 740 limited to R6 165 (R6 165) NOTE: MTC may never create a refund; therefore, it becomes limited in value.
Net normal tax due R 0
Apportionment of the medical scheme fees tax credit where contributions are paid by more than one taxpayer
There is no change as such to the methodology for apportionment of the tax credit.
There may be situations in which contributions are paid to a registered medical scheme by more than one taxpayer – for example, siblings who share the costs for a parent who is a “dependant” as defined. In such cases, the MTC must be apportioned between each person paying the contributions. The burden of proving that an amount was paid by more than one taxpayer, and that an MTC may be claimed by each taxpayer, will rest on the taxpayer.
The following formula can be used to determine the MTC that may be claimed by each taxpayer:
Contributions payable by the person
———————————– × Total MTC
Total contributions payable
Section 6B rebate (additional medical expenses tax credit) – AMTC
No significant changes were made to this section of the Act.
The AMTC is a rebate against taxes payable and is, as a result, limited to the tax payable before the offset of employees’ tax and provisional tax. The AMTC can accordingly NOT create a refund, NOR can any excess be carried forward to the next year of assessment. Taxpayers could qualify to claim an AMTC; however, the extent to which these qualifying medical expenses can be taken into account to calculate the AMTC is different depending on the category within which a taxpayer falls. A taxpayer who is 65 years of age or older may qualify for a portion of the AMTC to be taken into account through the monthly employees’ tax system.
The calculation of the AMTC to which a person is entitled is determined based on the following categories:
(a) Taxpayers aged 65 years and older
(b) The taxpayer, his or her spouse or his or her child is a person with a disability.
(c) All other taxpayers
One example category: Taxpayers aged 65 years and older
Persons aged 65 years and older could qualify for the AMTC, which is calculated as follows:
Qualifying medical expenditure paid during the year of assessment, amounting to the following:
- 33,3% of the fees paid to a medical scheme or qualifying foreign fund exceeds three times the amount of the MTC37 to which that person is entitled; plus
- 33,3% of qualifying medical expenses paid (out-of-pocket expenses).
To simplify this calculation, the following formula can be used:
33,3% × {[A − (3 × B)] + C}
in which:
“A” represents fees paid to a medical scheme or qualifying foreign fund for the year of assessment;
“B” represents the MTC for the year of assessment, and
“C” represents all qualifying medical expenses paid during the year of assessment.
Several other AMTC examples are provided in the updated SARS guide.
The next article will discuss the tax implications for employees and how to claim tax credits.