South Africa Medical Tax Credits 2026/27: SARS MTC, AMTC and PAYE Rules

South Africa's medical tax credits changed for the 2026/27 year of assessment. SARS now lists the medical scheme fees tax credit at R376 per month for the taxpayer, R376 per month for the first dependant and R254 per month for each additional dependant. The year of assessment runs from 1 March 2026 to 28 February 2027.

This is not a medical aid discount. It is a tax credit. SARS describes the medical scheme fees tax credit, often shortened to MTC, as a rebate that reduces normal tax payable. That distinction matters because a credit reduces tax directly after the tax table and rebates are applied. A deduction would reduce taxable income before the tax table is applied.

This guide explains the current SARS rates, how the monthly MTC affects PAYE, how the additional medical expenses tax credit works, what changes when a taxpayer is 65 or older, what changes for qualifying disability cases, and what documents should be kept for an assessment or audit. Facts were checked against SARS primary sources on May 3, 2026.

Use this guide beside the South Africa PAYE Calculator, the South Africa tax brackets guide, the South Africa provisional tax guide and the Health Insurance Compare tool. The calculator handles ordinary PAYE context, while this article explains the SARS medical credit rules behind the payslip and annual return.

2026/27 Medical Credit Rates In One View

The SARS Budget 2026 FAQ states that the first two covered persons increased to R376 per month each, up from R364, and each additional dependant increased to R254 per month, up from R246. The SARS Medical Credits page shows the same 2026/27 year of assessment and rate set.

For a taxpayer with a spouse and two children on a registered medical scheme, the monthly MTC is R376 + R376 + R254 + R254 = R1,260. Over a full 12-month tax year, that is R15,120 of direct tax credit before any additional medical expenses tax credit is considered.

How The Medical Scheme Fees Tax Credit Works

The MTC applies to fees paid by a taxpayer to a registered medical scheme, or to a similar fund outside South Africa, for the taxpayer and any dependants as defined in the Income Tax Act. SARS says the credit is fixed monthly and increases according to the number of dependants.

The credit is non-refundable on its own. SARS says an amount that is not allowed in the current year, usually because it exceeds normal tax payable, cannot be carried over to the next year of assessment. In practical terms, a taxpayer with very low tax may not be able to turn unused MTC into a separate cash refund.

The credit also belongs in the tax calculation, not in a medical scheme contribution comparison. Two households can pay very different medical scheme premiums and still receive the same MTC if the same number of covered people qualifies. The MTC is based on covered persons, not on the premium level.

The table below shows how that works:

Because the MTC reduces tax directly, it can be easier to understand inside a PAYE calculation. If annual tax after normal rebates is R80,000 and the taxpayer qualifies for R9,024 of MTC, the medical credit reduces the tax to R70,976 before any additional medical expenses tax credit is considered.

How Employers Use The Credit In PAYE

SARS says the MTC affects both the employer and the employee. The credit must be taken into account by the employer when calculating employees' tax to deduct or withhold from remuneration. That is why many formal payslips show a medical tax credit line or show PAYE after medical aid credit.

The employer needs the medical scheme contribution information before it can apply the credit correctly. If the employer pays the scheme directly or administers the scheme through payroll, the calculation is usually straightforward. If the employee pays a medical scheme privately, the employee may need to give the employer proof of contributions before the employer applies the credit monthly.

People whose MTC was not taken into account by an employer can claim it on assessment through the annual income tax return. SARS specifically mentions people such as retired individuals receiving a pension and self-employed taxpayers as examples of taxpayers who may claim on assessment instead of through monthly PAYE.

For workers comparing job offers, this means gross salary is not the whole story. Medical aid membership, dependants, retirement contributions, UIF and taxable benefits can all change the final tax withheld. Use the South Africa PAYE Calculator for the broad monthly tax picture, then verify the medical credit line against the SARS rates above.

Additional Medical Expenses Tax Credit

The MTC is the first medical credit. SARS also allows an additional medical expenses tax credit, often shortened to AMTC, for certain qualifying medical expenses. The AMTC is more technical because the formula changes based on the taxpayer's category.

SARS separates the AMTC calculation into three groups:

• taxpayers aged 65 years and older
• taxpayers where the taxpayer, spouse or child is a person with a qualifying disability
• all other taxpayers

For taxpayers aged 65 or older, SARS' guide uses a 33.3% formula. It applies 33.3% to the amount by which medical scheme fees exceed three times the MTC, plus qualifying out-of-pocket medical expenses. The same 33.3% formula applies where the taxpayer, spouse or child has a qualifying disability under the SARS rules.

For all other taxpayers, SARS uses a tighter formula. The credit is 25% of the qualifying excess above 7.5% of taxable income. In the statutory wording, the calculation starts with the amount by which medical scheme fees exceed four times the MTC, adds qualifying medical expenses, and then tests the result against 7.5% of taxable income, excluding certain lump sums and severance benefits.

That income threshold is why younger taxpayers without a qualifying disability often receive little or no AMTC even when they have real medical costs. The ordinary MTC may still reduce PAYE, but the additional credit depends on qualifying expenses, taxable income and the formula category.

Do not treat every health-related payment as qualifying. SARS' guide refers to registered medical practitioners, dentists, optometrists, homeopaths, naturopaths, osteopaths, herbalists, physiotherapists, chiropractors, orthopaedists, nursing homes, hospitals, nurses, prescribed medicines and prescribed disability or physical impairment expenditure, subject to the detailed rules. Amounts recovered from a medical scheme are not qualifying out-of-pocket expenses for this purpose.

Documents To Keep For SARS

The practical risk in medical credits is usually documentation. A payroll line can be wrong, a private medical scheme certificate can be missed, or an annual return can include expenses that SARS later asks the taxpayer to prove.

Keep these records together for the year of assessment:

• the medical scheme tax certificate, usually IT3(f) or the scheme's annual tax certificate
• proof of monthly medical scheme contributions if paid outside payroll
• invoices and receipts for qualifying medical expenses not recovered from the scheme
• proof of payment, such as bank statements or receipts
• proof that the person is a dependant where that is relevant
• ITR-DD or prescribed disability documentation where the disability rules are used
• employer payroll records or IRP5 details showing how the credit was applied

SARS' medical credits guide says taxpayers must be able to substantiate medical claims and keep records such as receipts, bank statements, deposit slips and invoices for five years from the date of return submission. If an objection or appeal is lodged, records linked to that assessment may need to be kept until the matter is finalised.

A Practical Workflow For 2026/27

For employees, start with the payslip. Count the people on the registered medical scheme, apply the 2026/27 monthly credit amounts, and compare the result to the medical credit or PAYE calculation shown by payroll. If the employer does not know about a privately paid medical scheme, the credit may only be available on annual assessment unless documentation is provided during the year.

For pensioners and self-employed taxpayers, keep the annual medical scheme certificate and qualifying expense records in the same tax folder. The MTC is still available if the taxpayer qualifies, but it may be claimed through the return rather than through employer PAYE.

For AMTC, classify the taxpayer first. The 65-plus and qualifying disability formulas are not the same as the formula for all other taxpayers. Then separate three values: total medical scheme fees paid, the MTC for the year, and qualifying expenses actually paid and not recovered. Do not mix account balances, scheme limits or rejected claims with amounts that were actually paid and qualify under SARS rules.

For annual tax planning, medical credits should be reviewed beside the broader tax stack. Check the current SARS tax brackets and rebates, retirement contribution deductions, UIF, medical credits, provisional tax status and any taxable benefits. The tax brackets guide gives the core rate table context, while the Health Insurance Compare tool helps separate contribution affordability from the tax credit result.

Sources Reviewed

The facts in this guide were checked on May 3, 2026 against current SARS materials:

• SARS Medical Credits page
• SARS Budget 2026 Frequently Asked Questions
• SARS Rates of Tax for Individuals
• SARS Guide for Employers in Respect of Tax Deduction Tables
• SARS Guide on the Determination of Medical Tax Credits

Bottom Line

The 2026/27 medical scheme fees tax credit is straightforward once the covered people are counted: R376 per month for the first covered person, R376 for the first dependant and R254 for each additional dependant. The harder part is making sure payroll has the correct information and that annual-return claims are backed by documents.

The additional medical expenses tax credit is not a blanket refund for medical spending. It depends on age, disability status, qualifying expenses, taxable income and SARS formulas. Treat medical credits as part of the PAYE and annual-tax workflow, not as an afterthought at filing time.