Medical tax credits — how do they work?
Medical scheme membership earns a fixed monthly tax credit: R376 each for the first two people on the scheme, R254 for each person after that. A family of four gets R376 + R376 + R254 + R254 = R1,260 a month — R15,120 a year — subtracted straight off the tax owed.
It is a credit, not a deduction: it reduces the tax itself, rand for rand, so it is worth exactly the same at every income level.
The monthly credit, per person
The medical scheme fees tax credit counts the people on the scheme: R376 a month for the main member, R376 for the first dependant, and R254 for each dependant after that (2026/27).
A single member gets R376 a month (R4,512 a year). A couple gets R752 (R9,024 a year). A family of four gets R1,260 a month — R15,120 a year. Most employers apply it through payroll, so it usually shows up as lower PAYE rather than a refund.
Credit vs deduction — why the word matters
A deduction reduces taxable income, so its value depends on your marginal rate: R1,000 deducted saves R180 in the 18% bracket and R450 in the 45% bracket. A credit skips that step entirely — it comes off the final tax bill itself, like a rebate. R1,000 of credit saves R1,000, whoever you are.
That design makes the medical credit worth proportionally more to lower earners — a deliberate feature of how it replaced the old deduction system.
The additional credit (section 6B)
Heavy medical years can earn a second credit on top. For someone under 65, the formula in plain steps: take what you paid the scheme for the year, subtract four times your annual credits; add qualifying out-of-pocket medical expenses; subtract 7.5% of your taxable income; the additional credit is 25% of whatever is left.
The four-times threshold and the 7.5% floor mean it only pays out when medical costs are genuinely large relative to income — in an ordinary year, most members' formula lands on zero.
The under-65 formula with real numbers
A family of four (credits R1,260 a month, R15,120 a year) pays the scheme R6,000 a month — R72,000 a year — plus R20,000 in qualifying out-of-pocket expenses, on a taxable income of R300,000.
Contributions minus four times the credits: R72,000 − R60,480 = R11,520. Add the R20,000 out-of-pocket: R31,520. Subtract 7.5% of taxable income (R22,500): R9,020. The additional credit is 25% of that — R2,255 off the tax bill, on top of the R15,120.
65-plus and disability: a more generous formula
From age 65, or where the taxpayer or a dependant has a disability, the formula loosens in three ways: the contribution threshold drops to three times the credits, the percentage rises to 33.3%, and the 7.5%-of-income floor disappears entirely — 33.3% of qualifying expenses counts from the first rand.
The result: the same medical spend converts to meaningfully more credit after 65 than before it.
Terms used on this page
- taxable income
- The income tax is calculated on, after allowed deductions. For most salaried people it is roughly gross salary minus retirement contributions.
- marginal rate
- The tax rate on your next rand of income — the bracket the top slice of your income falls into.
- rebate
- A fixed amount SARS subtracts from your calculated tax each year. It is what makes the first slice of income effectively tax-free.
Reviewed July 2026 · 2026/27 tax year figures