Medical Expenses in 2025: What You Can and Can’t Deduct

7 Oct

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Medical bills are one of life’s unavoidable expenses. With private healthcare costs rising faster than medical aid cover, many South Africans are left paying significant amounts out of pocket. The good news is that SARS provides some tax relief in the form of medical tax credits.

Understanding how these credits work, and what expenses qualify, can save you money when filing your return.

Deductible Expenses vs Tax Rebates: Know the Difference

When it comes to tax, not all benefits are created equal. Medical expenses don’t work like normal deductions, they are claimed as tax rebates (credits).

Deductions reduce your taxable income before SARS calculates your tax.
Example: If you earn R400,000 and claim a R20,000 deduction (say, for retirement contributions), SARS taxes you on R380,000. The saving depends on your tax bracket.
Rebates (credits) directly reduce the tax you owe, after SARS has calculated it.

📌For Example:

If your tax bill is R50,000 and you qualify for a R14,640 medical credit, you only pay R35,360.

👉 The key difference:

Deductions lower the base on which your tax is calculated.
Rebates reduce your tax bill rand-for-rand.

This is why medical credits are so valuable, they cut your actual tax payable, regardless of your income bracket.

Who Counts as a Dependent?

You can claim for medical expenses paid for yourself, your spouse, your children (including step- and adopted children), and certain other family members who depend on you, such as parents, grandparents, or siblings. Dependents also include anyone recognised by your medical aid as a beneficiary.

Medical Scheme Fees Tax Credit for 2025

For the 2024/2025 tax year (1 March 2024 – 28 February 2025), the credits are:

R364 per month for the main member
R364 per month for the first dependent
R246 per month for each additional dependent

📌For Example:

If you pay for medical aid for yourself, your spouse, and two children, your monthly credit is:

Main member + spouse = R728
Two children = R246 × 2 = R492
Total monthly credit = R1,220 (or R14,640 for the year)

This amount is deducted directly from your tax liability, regardless of your income level.

What About Medical Insurance Contributions?

Many people confuse medical insurance with medical aid, but for tax purposes SARS makes a clear distinction:

Only payments made to a registered medical scheme qualify for the Medical Scheme Fees Tax Credit.
“Medical insurance” products (such as hospital cash plans or gap cover) are treated as short-term insurance policies, not medical aid contributions.
This means that if you’re paying for a hospital plan sold as “insurance,” you won’t get a medical tax credit, unless it is a registered medical scheme benefit.

👉Note: To claim the monthly credit, make sure your contributions are to a medical aid scheme registered under the Medical Schemes Act, not just to an insurance product marketed as healthcare cover.

Additional Medical Expenses Tax Credit

This credit covers excess medical aid contributions (amounts you pay over and above the capped allowance) and qualifying out-of-pocket expenses not reimbursed by medical aid.

What is a qualifying expense?

Services by registered medical professionals (doctors, dentists, physiotherapists, etc.).
Prescribed medicines bought from a pharmacist.
Hospital and nursing care.
Medical expenses incurred abroad.

What doesn’t qualify?

Over-the-counter medicines like vitamins or flu tablets, unless prescribed by a doctor.
Payments to medical insurance products (unless they are registered medical aid contributions).

The SARS Formula

The formula SARS applies depends on your age and whether you or a dependent has a disability:

Under 65, no disability:
25% × [Excess contributions + Out-of-pocket expenses – 7.5% of taxable income]
Excess medical contributions = Total contributions – (4 x medical schemes credit)
Under 65 with disability OR 65 and older:
33.3% × [Excess contributions + Out-of-pocket expenses]

📌For Example:

Sipho is 45 years old. He pays R5,500 per month to a medical aid for himself, his wife, and their three children. During the year, he also spent R60,000 out of pocket on medical bills. His taxable income was R400,000.

Step 1: Medical Scheme Fees Credit

Main member and spouse = R728 per month (R364 × 2)
Three children = R738 per month (R246 × 3)
Total monthly credit = R1,466
Annual credit = R1,466 × 12 = R17,592

Step 2: Excess Medical Contributions

Total annual contributions = R5,500 × 12 = R66,000
Less: 4 × annual medical scheme fees credit = 4 × R17,592 = R70,368
Result = R66,000 – R70,368 = negative → treated as 0 in this case.

Step 3: Out-of-Pocket Expenses

Total out-of-pocket = R60,000
Less: 7.5% of taxable income = 7.5% × R400,000 = R30,000
Qualifying excess = R60,000 – R30,000 = R30,000

Step 4: Additional Medical Expenses Credit

25% of qualifying excess = 25% × R30,000 = R7,500

Step 5: Total Medical Tax Credit

Medical Scheme Fees Credit = R17,592
Additional Medical Expenses Credit = R7,500
Total = R25,092

Supporting Parents’ Medical Costs

You can claim medical aid and expenses you cover for parents, provided they are financially dependent on you. To prove this, SARS may require:

A medical aid statement showing the debit order from your bank account, or
A bank statement confirming payment, or
A letter from the medical scheme confirming your contributions.

Frail care costs can also be deductible, but SARS will only allow the portion you personally paid if costs were shared with siblings.

In Summary

Medical tax credits don’t eliminate the pain of healthcare costs, but they can ease the burden. Knowing the difference between deductions and rebates, and understanding that only medical aid contributions (not medical insurance products) qualify, ensures you claim every cent you’re entitled to in 2025.