Medical scheme contributions earn a fixed monthly credit that comes straight off your tax bill, rand for rand: R376 for the main member, R376 for the first dependant and R254 for each additional dependant in 2026/27, per SARS's medical tax credit rates page. Heavy out-of-pocket medical costs can earn a second credit on top, but only above a high floor.
The Medical Scheme Fees Tax Credit (MTC)
The MTC is a credit, not a deduction: it reduces the tax you owe directly and applies whatever your income. For 2026/27, per month:
- Main member: R376
- First dependant: R376 (so R752 combined for two)
- Each additional dependant: R254
A sole prop on a scheme with a spouse gets R752 x 12 = R9,024 off the year's tax bill. A family of four gets (R752 + R254 + R254) x 12 = R15,120.
The Additional Medical Expenses Tax Credit (AMTEC)
The second credit, under section 6B, rewards genuinely high medical spend.
Under 65, no disability:
- Take your actual medical scheme contributions and subtract four times your annual MTC. If anything is left over, 25% of it counts.
- Add 25% of qualifying out-of-pocket expenses.
- Then subtract 7.5% of your taxable income: only the portion above that floor is the credit.
65 and over, or where you, your spouse or a child has a disability:
- Contributions above three times the annual MTC, at 33.3%
- Plus 33.3% of all qualifying out-of-pocket expenses
- With no 7.5% floor
For most working tradies under 65 the 7.5% floor swallows the AMTEC entirely in a normal year. It comes alive in a bad year: a serious injury, a child's operation, a big dental bill, especially if income also dipped.
How a sole prop claims
Everything happens on the annual ITR12 return: declare your scheme contributions and out-of-pocket expenses and eFiling calculates both credits automatically. Keep the medical scheme's annual contribution certificate and every receipt for doctors, dentists, pharmacies and co-payments. Qualifying expenses are the costs your scheme did not cover.
Worked example (2026/27)
A sole prop under 65, taxable income R350,000, pays R3,000 a month for a scheme covering two people, plus R15,000 out of pocket for the year:
- MTC: R752 x 12 = R9,024 off the tax bill
- AMTEC contributions test: R36,000 paid minus four times R9,024 (R36,096) = nothing left over
- AMTEC expenses test: R15,000 is below the floor of 7.5% x R350,000 = R26,250, so nothing there either
- Total medical credit for the year: R9,024
Had the out-of-pocket costs been R40,000 after an accident, the slice above R26,250 would have started feeding a real AMTEC claim. Keep the receipts even in good years; you only know a bad year at the end of it.
Common mistakes
- Calling it a deduction. The MTC comes off your tax, not your income; mixing this up distorts every estimate, including the IRP6 (see Provisional Tax Explained).
- Claiming costs the scheme reimbursed. Only unrecovered expenses qualify.
- Losing the receipts. SARS verification routinely asks for the scheme certificate and proof of out-of-pocket spend (see SARS Verification and Audit).
- Forgetting dependants added mid-year. The credit runs per month of membership, so a child added in June still earns credits from June.
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