SARS Updates Guide on Medical Aid Tax Credits for 2025 Tax Season

Posted 16 July 2025 Written by Acts Online
Category Tax

Brought to you by SA Accounting Academy: The South African Revenue Service (SARS) has released an updated technical guide detailing the calculation and application of medical tax credits for the 2025 year of assessment.

In terms of the Income Tax Act, No. 58 of 1962, SARS has issued the updated Guide on the Determination of Medical Aid Tax Credits. This revision incorporates legislative amendments introduced by the Revenue Laws Second Amendment Act, No. 44 of 2024, which was promulgated on 24 December 2024. As the year of assessment for individuals ends on the last day of February, these amendments apply to the years of assessment commencing on or after 1 March 2024 (the 2025 tax year).

The guide provides comprehensive guidelines and 20 practical examples regarding the two distinct types of tax credits available to taxpayers:

  • Medical Scheme Fees Tax Credit (MTC): A rebate in respect of fees paid by a taxpayer to a registered medical scheme for the benefit of the taxpayer and their dependants.
  • Additional Medical Expenses Tax Credit (AMTC): A rebate which replaced the previous deduction of medical allowances, dealing with other qualifying medical expenses, including out-of-pocket costs and expenses related to physical impairment or disability.

The updated guide clarifies the methodology for determining the AMTC, which is calculated as a percentage of the amount by which qualifying medical expenses exceed a specific threshold. It further outlines the requirements for substantiating claims for expenses not covered by a medical scheme, ensuring compliance with the evidentiary standards required for the 2025 filing season.

Click here to download the Guide on the Determination of Medical Tax Credits (Issue 16).

What this means for you, your business, or your clients

  • For yourself: You must ensure that your personal tax records for the 2025 year of assessment distinguish clearly between medical scheme contributions and out-of-pocket expenses to correctly apply the MTC and AMTC rebates.
  • For your business: Payroll departments must verify that the 2025 MTC rates are correctly configured in the payroll software to ensure accurate PAYE withholding for employees throughout the current tax cycle.
  • For your clients: Practitioners should advise clients to maintain a comprehensive file of qualifying out-of-pocket medical expenses and disability-related costs, as the AMTC calculation requires specific threshold testing before the credit is granted.

Originally published at https://accountingacademy.co.za/news/read/sars-updated-guide-on-the-determination-of-medical-aid-tax-credits

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