Medical Scheme Fees Tax Credit

A credit against tax, not a deduction from income

The Medical Scheme Fees Tax Credit (MTC) is a fixed monthly amount for each beneficiary on a registered medical scheme. It is a credit: it comes off your PAYE directly, so it lowers the tax you actually pay rather than the income the tax is worked out on. That makes it worth the same in rand to everyone who qualifies, regardless of their tax bracket.

How the amounts add up

The credit is R376 a month for the main member and the same R376 for the first dependant, then R254 a month for each additional dependant after that. In the calculator you choose how many beneficiaries you have — count yourself plus your dependants — and the monthly credit is annualised and subtracted from your PAYE for the year.

A worked example

Take a main member with two dependants — a spouse and one child. The main member and the first dependant each attract R376, and the second dependant attracts R254. Together that is R1 006 a month, or R12 072 over the full tax year. That whole amount is taken off the family’s PAYE — not off their taxable income — so it is a direct, rand-for-rand reduction in tax. If the calculated PAYE is smaller than the credit, the tax simply floors at zero; the credit is not paid out as a refund.

The credit is not your medical-aid premium

Keep the two apart. The premium you pay your medical scheme each month is a private cost — it is not withheld from your pay and this calculator does not deduct it. The credit modelled here is the separate tax relief SARS grants for belonging to a scheme: a flat monthly amount per beneficiary that reduces your PAYE. It does not depend on how large your premium is — only on how many beneficiaries are covered. The amounts follow the SARS source cited above; a recent change may not be reflected here yet, and they carry no final sign-off from us.

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