LEARN · PERSONAL TAX
South African Personal Income Tax — The Complete 2026/27 Guide
MEDIUM DISCLAIMERSouth African individual income tax is levied under Section 6 of the Income Tax Act 58 of 1962 using a seven-bracket progressive table for the 2026/27 year of assessment (1 March 2026 to 28 February 2027), ranging from 18% on income up to R245,100 to 45% on income above R1,878,600. Tax calculated from the table is reduced by rebates: primary R17,820 for all taxpayers, secondary R9,765 for those aged 65 and older, and tertiary R3,249 for those 75 and older. The annual tax-free threshold is R99,000 for individuals below 65. Key credits include the medical scheme fees tax credit of R376 per month per main member, and an interest exemption of R23,800 (R34,500 for those 65 and older) under Section 10(1)(i).
18%
Lowest tax rate
R1 – R245,100 — s6 ITA
45%
Highest tax rate
Above R1,878,600 — s6 ITA
R17,820
Primary rebate
All individual taxpayers
R99,000
Tax-free threshold
Under age 65 — 2026/27
R376/month
Medical credit — main member
s6A ITA — per member
R23,800
Interest exemption under 65
s10(1)(i) ITA — 2026/27
HOW SOUTH AFRICAN PERSONAL TAX WORKS
Progressive brackets, rebates, and the difference between marginal and effective rates
A South African professional earning R700,000 per year does not pay 39% on all of their income. They pay 18% on the first R245,100, 26% on the next R138,000, 31% on the next R147,100, 36% on the next R165,600, and 39% only on the slice from R695,801 to R700,000 — the final R4,200. After the primary rebate of R17,820, their total tax is approximately R185,994. Their effective rate is 26.6%, not 39%. The 39% marginal rate applies only to the top slice of their income — and is the rate that matters for planning decisions like retirement fund contributions, which save tax at the marginal rate.
Personal income tax in South Africa operates under Section 6 of the Income Tax Act 58 of 1962, updated annually by the Taxation Laws Amendment Act following the February Budget. The 2026/27 year of assessment runs from 1 March 2026 to 28 February 2027. The tax table, rebates, thresholds, and credits in this guide apply for the full period. Individuals are taxed on their worldwide income — South African residents pay tax on income earned anywhere in the world, with credit for foreign taxes paid. Non-residents pay tax only on income from South African sources.
The personal tax system has three distinct reduction mechanisms that operate in sequence. First, deductions reduce gross income to produce taxable income — retirement fund contributions (Section 11F), business expenses (Section 11(a)), and Section 18A donations all reduce the income base before tax is calculated. Second, rebates under Section 6 reduce the tax liability after the table is applied — the primary rebate of R17,820 reduces tax payable by that amount regardless of income level, which is why a higher-income taxpayer benefits the same absolute rand amount from the primary rebate as a lower-income taxpayer. Third, tax credits — specifically the medical scheme fees tax credit under Section 6A — further reduce tax payable after rebates. The sequencing matters: deductions save tax at the marginal rate (more valuable to high earners), while rebates and credits save a fixed rand amount regardless of income level.
South African personal tax has a significant interaction with provisional tax for taxpayers who earn income beyond their salary. Any individual who earns rental income, freelance income, investment income above the interest exemption, or business income is a provisional taxpayer and must submit two IRP6 returns per year — the first by 31 August and the second by 28 February. Failure to make accurate provisional payments results in interest at 10.25% per annum on underpayments and, where the actual taxable income exceeds the estimate by more than 20% (or R50,000), a 20% underestimation penalty on the shortfall. Salaried employees whose employer correctly withholds PAYE are generally not provisional taxpayers — but the moment they earn a rand of rental income or significant investment returns, provisional tax status typically applies.
2026/27 TAX TABLE
s6 Income Tax Act 58/1962 · Budget 2026/27
R1 – R245,100
18% of income
R245,101 – R383,100
R44,118 + 26%
R383,101 – R530,200
R79,998 + 31%
R530,201 – R695,800
R125,599 + 36%
R695,801 – R887,000
R185,215 + 39%
R887,001 – R1,878,600
R259,783 + 41%
Above R1,878,600
R666,339 + 45%
REBATES & THRESHOLDS 2026/27
Primary rebate
R17,820
All taxpayers
Secondary rebate
R9,765
Age 65+
Tertiary rebate
R3,249
Age 75+
Total — age 75+
R30,834
All three combined
Threshold — under 65
R99,000
R8,250/month
Threshold — 65 to 74
R153,250
R12,771/month
Threshold — 75+
R171,300
R14,275/month
KEY CREDITS & EXEMPTIONS
Medical credit — main member
R376/month
s6A ITA
Medical credit — 1st dependant
R376/month
s6A ITA
Medical credit — each add'l
R254/month
s6A ITA
Interest exemption — under 65
R23,800/year
s10(1)(i) ITA
Interest exemption — 65+
R34,500/year
s10(1)(i) ITA
Donations deduction limit
10% of taxable income
s18A ITA
RA deduction cap
R430,000/year
s11F ITA — Budget 2026
CALCULATE YOUR TAX
Enter your taxable income, age, and medical aid members for an instant 2026/27 income tax estimate.
Income Tax Calculator →THE CALCULATION FORMULA
Seven steps — from gross income to tax payable
The Income Tax Act prescribes an exact sequence. Deductions reduce the income base. The tax table converts income to tax. Rebates and credits reduce the tax liability. Each step must be applied in order — applying a credit before the rebate or a deduction after the table produces an incorrect result.
Determine gross income from all sources
Section 1 — gross income definition · Income Tax Act 58/1962
Gross income is the total amount received or accrued from every source during the year of assessment. For a salaried employee, this is straightforward — the IRP5 total. For a taxpayer with multiple income streams, it includes: employment income (salary, bonuses, fringe benefits); business or freelance income (net of business expenses under Section 11(a)); rental income (gross rent before deductions); investment income (interest, dividends, and unit trust distributions); and capital gains included amounts from the Eighth Schedule. Foreign income must be declared and converted to South African rands at the average rate for the year.
COMMON TRAP
South African tax residents are taxed on worldwide income — income earned in Namibia, the UK, or anywhere else must be declared. The foreign income exemption under Section 10(1)(o)(ii) (the R1,257,750 foreign employment exemption for individuals who physically work outside South Africa for more than 183 days) is often claimed incorrectly. It applies to employment income only, not business income, and requires continuous presence abroad.
Apply allowable deductions to arrive at taxable income
Section 11F (retirement) · Section 11(a) (business expenses) · Section 18A (donations)
Allowable deductions reduce gross income to taxable income before the tax table is applied. The most valuable personal deduction is the retirement fund contribution under Section 11F — up to 27.5% of the greater of remuneration or taxable income, capped at R430,000 per year for 2026/27. Business expenses for self-employed individuals under Section 11(a) must be actually incurred in the production of income and not of a capital nature. Home office deductions are allowable only if the office is specifically equipped for the work and regularly and exclusively used for trade purposes. Section 18A donations to approved public benefit organisations reduce taxable income up to 10% of taxable income, with excess carried forward.
COMMON TRAP
Assessed losses (losses from prior years) are carried forward and offset against future income. A sole proprietor who generated a loss of R80,000 in 2024/25 can carry that forward to reduce their 2026/27 taxable income. Many individual taxpayers with side businesses miss this carryforward entirely.
Apply the interest exemption
Section 10(1)(i) — Interest exemption · Income Tax Act 58/1962
From total interest income included in gross income, exempt R23,800 per year for individuals below age 65, and R34,500 for individuals aged 65 and older. The exemption applies to local interest from South African sources — bank accounts, money market funds, fixed deposits, RSA Retail Savings Bonds, and listed bonds. It does not apply to foreign interest, which is fully taxable. The practical effect: a retiree earning R34,500 in interest from a fixed deposit pays zero income tax on that interest — the full amount is exempt. Interest above the threshold is included in taxable income and taxed at the marginal rate.
Apply the 2026/27 income tax table
Section 6 — SARS Budget 2026/27 tax table
Apply the seven-bracket table to taxable income. Each bracket applies only to the portion of income within that range — not to total income. A taxpayer with R600,000 taxable income falls into the 36% bracket, but pays 18% on the first R245,100, 26% on the next R138,000, 31% on the next R147,100, and 36% only on the remaining R69,800. The formula for each bracket provides the cumulative base tax amount — add the base amount for the relevant bracket and apply the rate to the excess above the bracket's lower boundary.
Subtract rebates — primary, secondary, tertiary
Section 6(2) ITA — rebates · R17,820 / R9,765 / R3,249
After calculating tax from the table, subtract the applicable rebates. Primary rebate of R17,820 applies to all individual taxpayers. Secondary rebate of R9,765 applies if the taxpayer is aged 65 or older. Tertiary rebate of R3,249 applies if aged 75 or older. Rebates are cumulative — a 76-year-old receives all three (R30,834 total). If the result after rebates is zero or negative, no tax is payable. The employer must hold documentary evidence of date of birth to apply secondary and tertiary rebates for PAYE purposes — the rebates do not apply automatically without this verification.
COMMON TRAP
Rebates reduce the tax payable by a fixed rand amount — they are not percentage reductions of taxable income. A taxpayer in the 45% bracket and a taxpayer in the 18% bracket both save exactly R17,820 from the primary rebate. This is a fundamentally different mechanism from a deduction, which saves more for high earners.
Subtract the medical scheme fees tax credit
Section 6A ITA — registered medical scheme contributions
If the taxpayer contributes to a registered medical scheme under the Medical Schemes Act 131 of 1998, calculate the annual credit: R376 × 12 per main member, R376 × 12 for the first dependant, and R254 × 12 for each additional dependant from the third person. Subtract the annual credit from tax after rebates. The result cannot be negative — the credit is non-refundable in the individual return context. For a taxpayer with a spouse and two children on medical aid: (R376 + R376 + R254 + R254) × 12 = R15,120 annual credit. This credit applies only to registered medical schemes — gap cover, hospital cash plans, and international health plans do not qualify.
Calculate effective rate and marginal rate — the two numbers that drive planning
Planning tool — not a statutory step
Tax payable after all rebates and credits divided by taxable income gives the effective rate — the actual percentage of income paid as tax. The marginal rate is the rate from the tax table that applies to the last rand of taxable income — the rate at which any additional income will be taxed. These two rates diverge significantly for most South African taxpayers. A taxpayer on R500,000 has an effective rate of approximately 19.7% but a marginal rate of 31%. Every planning decision — retirement contributions, discretionary income management, bonus structuring — should be evaluated at the marginal rate, not the effective rate.
BEYOND THE INCOME TAX TABLE
Five additional personal tax regimes every South African must understand
Provisional Tax — IRP6
Fourth Schedule — Income Tax Act
Any taxpayer who earns income beyond remuneration — rental, freelance, investment income above the interest exemption — must register as a provisional taxpayer. Two IRP6 returns are compulsory: the first payment by 31 August (based on estimated annual taxable income), and the second by 28 February. The first payment must be at least 50% of the estimated annual tax liability, and the second must settle the balance. A voluntary third payment by 30 September closes out any remaining liability without interest. Underestimating by more than 20% of actual taxable income (or R50,000) triggers a 20% penalty on the shortfall.
Retirement Lump Sum Tax — Second Schedule
Second Schedule — Income Tax Act 58/1962
Lump sums taken at retirement, on retrenchment, or on death from pension, provident, and retirement annuity funds are taxed under the retirement benefit table. The first R550,000 is tax-free (cumulative lifetime). The next R220,000 (R550,001 to R770,000) is taxed at 18%. R770,001 to R1,155,000 attracts R39,600 plus 27%. Above R1,155,000 the rate is R143,550 plus 36%. The table is cumulative — prior retirement benefits reduce the tax-free and concessionary portions available. SARS issues a directive to the fund, which withholds tax before paying the benefit.
Pre-Retirement Withdrawal Tax — Withdrawal Table
Second Schedule — withdrawal benefit table
Withdrawals from pension, provident, or preservation funds before retirement age (55) use a harsher table. The first R27,500 is tax-free (cumulative lifetime). R27,501 to R726,000 is taxed at 18%. R726,001 to R1,089,000 attracts R125,730 plus 27%. Above R1,089,000 the rate is R223,740 plus 36%. The table is cumulative — members who have made prior withdrawals (including when changing jobs) may find their entire new withdrawal is taxable at 18% or higher. The SARS tax debt deduction applies — any outstanding SARS liability is deducted from the withdrawal before payout.
Transfer Duty — Property Acquisition
Transfer Duty Act 40/1949
Transfer duty applies when purchasing second-hand property (not subject to VAT). Zero on the first R1,210,000; 3% on R1,210,001 to R1,663,800; R13,614 + 6% on R1,663,801 to R2,329,300; R53,544 + 8% on R2,329,301 to R2,994,800; R106,784 + 11% on R2,994,801 to R13,310,000; and R1,241,456 + 13% above R13,310,000. Transfer duty is paid to SARS within six months of acquisition, managed by the conveyancing attorney. On a R2,500,000 property, transfer duty is R53,544 + 8% × R170,700 = R67,200.
Dividends Withholding Tax — 20%
Section 64E — Income Tax Act 58/1962
Dividends received from South African companies are subject to dividends withholding tax (DWT) at 20%, withheld at source by the company or regulated intermediary (stockbroker, fund administrator). The dividend is excluded from the individual's taxable income — the withholding tax is a final tax on that income. South African resident companies pay dividends free of DWT in some circumstances. Tax-free savings accounts (TFSA) exempt dividends from DWT, making them particularly effective for high-dividend portfolios. Foreign dividends are treated differently — they may be subject to income tax at the marginal rate, with a rebate for foreign withholding taxes paid.
Tax-Free Savings Accounts — TFSA
Section 12T — Income Tax Act 58/1962
South African residents may invest up to R46,000 per year (2026/27 limit) and a lifetime maximum of R500,000 in a tax-free savings account. All returns within a TFSA — interest, dividends, and capital gains — are completely exempt from income tax and CGT. Withdrawals are also tax-free. The TFSA is the single most tax-efficient savings vehicle available to South Africans for long-term wealth accumulation outside retirement funds. Contributions above the annual limit are penalised at 40% of the excess. Importantly, withdrawn amounts do not restore the contribution room — the annual and lifetime limits apply to contributions, not net balances.
WORKED EXAMPLES
Five taxpayer scenarios — every major personal tax situation
Each example applies the seven-step formula with real Rand figures. Scenarios cover: a junior salaried employee below the threshold, a professional with retirement and medical deductions, a freelancer with multiple income sources, a retiree with a living annuity and investment income, and a high earner optimising the full R430,000 retirement cap.
Junior employee — R90,000 annual salary, below the threshold. Zero tax.
Thabo is 24 years old and earns R7,500 per month gross — R90,000 per year. He has no medical aid, no retirement fund contributions, and no additional income. His employer withholds no PAYE because his income is below the R99,000 tax-free threshold. This is the most common personal tax scenario in South Africa — millions of workers earn below the threshold and owe zero income tax. Thabo's take-home pay after UIF (1% of R7,500 = R75) is R7,425 per month.
The critical planning insight: if Thabo receives a salary increase to R9,000 per month (R108,000 per year), he crosses the threshold. His first rand of taxable income above R99,000 triggers PAYE at 18%. A raise of R1,500/month costs him approximately R135/month in PAYE — he is still significantly better off, but must understand that the threshold is not a cliff edge that makes the entire income taxable.
Professional — R480,000 salary, pension 10%, medical aid with 3 members
Nompumelelo is 38 years old and earns R480,000 per year. She contributes 10% of her salary (R48,000) to the company pension fund. Her employer also contributes 10% (R48,000 — treated as a fringe benefit on her IRP5). She has three people on her medical aid (herself, husband, and one child).
The pension fund deduction (both personal and employer contributions: R96,000 total, well within the 27.5% cap and R430,000 monetary cap) reduces her taxable income significantly. Combined with the medical credit, her effective tax rate is 15.4% despite sitting in the 36% marginal bracket.
Freelancer — multiple income sources, provisional taxpayer, rental income
Sipho is 45 years old, self-employed as a management consultant. He earns R620,000 from consulting fees. He has a rental property generating R84,000 gross rent, with allowable deductions (bond interest, rates, levies, wear and tear) of R52,000 — net rental income R32,000. He earns R28,000 in bank interest (R4,200 above his R23,800 exemption). He has no medical aid. He contributes R50,000 to a retirement annuity fund. He is a provisional taxpayer and must file two IRP6 returns.
Despite appearing to earn over R680,000, Sipho's taxable income after the RA deduction and interest exemption is R624,200. His marginal rate is 39% and he must make provisional tax payments to avoid interest.
Retiree — age 68, living annuity income, investment interest, secondary rebate
Nomsa is 68 years old and retired. Her only income is R120,000 per year from her living annuity (7.5% on R1,600,000 capital) and R38,000 in interest from a fixed deposit at her bank. She has two people on her medical aid (herself and her husband). She benefits from the secondary rebate (age 65+) and the higher interest exemption of R34,500.
The secondary rebate and higher interest exemption combine with the medical credit to dramatically reduce Nomsa's tax. Her total income is R158,000 but taxable income after the interest exemption is only R123,500. The secondary rebate and medical credit further reduce her tax to just R3,330 per year — an effective rate of 2.1% on total income received.
High earner — R1,500,000 income, maximising R430,000 RA cap, tax saving demonstrated
James is 52 years old and earns R1,500,000 per year as a senior executive. He has no employer pension fund. He contributes the full R430,000 (the 2026/27 monetary cap) to his retirement annuity fund. He has two people on his medical aid (himself and his wife). He wants to see the rand value of his RA contribution in tax saved.
The R430,000 RA contribution at James's 41% marginal rate saves him R176,300 per year in income tax. His fund grows tax-free and the tax is deferred until retirement. After-tax cost of the R430,000 RA contribution is only R253,700 — SARS effectively subsidises R176,300 of the contribution.
QUICK REFERENCE
Tax at selected income levels — marginal vs effective rate, 2026/27
Individual below age 65, no medical aid, no retirement fund contributions. Shows the fundamental gap between the marginal rate (what tax theorists quote) and the effective rate (what taxpayers actually pay).
| Taxable income | Tax before rebates | Less: primary rebate | Tax payable | Marginal rate | Effective rate |
|---|---|---|---|---|---|
| R90,000 | R16,200 | R17,820 | R0 | 18% | 0% |
| R150,000 | R27,000 | R17,820 | R9,180 | 18% | 6.1% |
| R300,000 | R60,518 | R17,820 | R42,698 | 26% | 14.2% |
| R500,000 | R116,237 | R17,820 | R98,417 | 31% | 19.7% |
| R700,000 | R203,215 | R17,820 | R185,395 | 39% | 26.5% |
| R1,000,000 | R320,283 | R17,820 | R302,463 | 41% | 30.2% |
| R1,500,000 | R511,113 | R17,820 | R493,293 | 41% | 32.9% |
| R2,500,000 | R980,369 | R17,820 | R962,549 | 45% | 38.5% |
| Source: SARS Budget 2026/27 Tax Pocket Guide · Section 6 Income Tax Act 58/1962 · Individual below age 65, no medical aid, no deductions. No medical tax credit applied. | |||||
COMMON MISTAKES
Six personal tax errors South Africans make repeatedly
Confusing the marginal rate with the effective rate
A taxpayer who discovers their salary has put them in the 36% bracket often assumes 36% of their entire income goes to SARS. It does not. Only the income slice above R530,200 attracts 36%. Everything below that is taxed at lower rates. The effective rate at R600,000 taxable income is approximately 22% — significantly below the 36% marginal rate. The marginal rate matters for planning decisions. The effective rate is what you actually pay. Treating them as the same leads to over-estimating tax bills and under-investing in retirement contributions.
s6 ITA — progressive tax tableNot claiming the full retirement fund deduction
Many South African taxpayers contribute to a company pension fund but never separately contribute to a retirement annuity — even though the Section 11F cap of R430,000 per year (Budget 2026) and the 27.5% rate give them significant additional deductible space beyond the company pension contribution. An employee with employer contributions of R80,000 has R350,000 of remaining deductible space — the cost of contributing that R350,000 to an RA is only R143,500 at a 41% marginal rate, with R350,000 growing tax-free in the fund. Most South Africans leave this space completely unused.
s11F ITA — R430,000 cap — Budget 2026Missing provisional tax obligations after the first year of additional income
Salaried employees who buy a rental property in February 2026 often assume PAYE has covered their tax obligation. It has not — they are now provisional taxpayers from 1 March 2026. Their first IRP6 is due by 31 August 2026. Missing this payment means interest at 10.25% per annum from the due date, and if the actual taxable income exceeds their provisional estimate by more than 20%, a 20% underestimation penalty applies. The penalty and interest can easily exceed R15,000 on a modest rental property scenario — an avoidable cost.
Fourth Schedule — IRP6 provisional tax obligationsNot applying for tax-free savings account contributions early
The R46,000 annual TFSA contribution limit cannot be carried forward — unused allowance for 2025/26 does not add to the 2026/27 limit. Every year a South African fails to maximise their TFSA contribution is a year of tax-free compounding permanently lost. Over a 30-year investment horizon, the difference between maximising TFSA contributions annually versus investing in a standard unit trust account can amount to several hundred thousand rands in additional after-tax wealth, purely due to the exemption of interest, dividends, and CGT within the TFSA.
s12T ITA — TFSA R46,000 annual limit, R500,000 lifetimeTreating interest income as completely exempt
The interest exemption of R23,800 (under 65) or R34,500 (65 and older) is an exemption on the first portion of interest — not on all interest income. A retiree earning R80,000 in interest from their savings exempts R34,500 and pays income tax on the remaining R45,500 at their marginal rate. Many South Africans with significant savings do not account for the taxable portion of their interest income in their annual tax return, resulting in understatement penalties and interest on the under-declared amounts.
s10(1)(i) ITA — interest exemption thresholdsFailing to update SARS of new income sources
South African taxpayers have an obligation to notify SARS when they begin earning new categories of income — specifically rental income, freelance income, or investment income above the interest exemption — as this triggers provisional taxpayer status. Continuing to file as a regular employee while earning significant rental income is a compliance failure. SARS cross-references Deeds Office transfers, rental income declared by tenants in their own returns, and bank interest certificates (IT3(b) forms) against individual tax returns. Discrepancies result in verification requests, penalties, and interest on underpaid tax.
Fourth Schedule — provisional taxpayer definition and registrationFREQUENTLY ASKED QUESTIONS
Personal income tax — questions South Africans ask
What are the income tax brackets in South Africa for 2026/27?
The 2026/27 tax brackets are: 18% on R1–R245,100; R44,118 + 26% on R245,101–R383,100; R79,998 + 31% on R383,101–R530,200; R125,599 + 36% on R530,201–R695,800; R185,215 + 39% on R695,801–R887,000; R259,783 + 41% on R887,001–R1,878,600; and R666,339 + 45% above R1,878,600. These rates apply to taxable income after deductions, before rebates. Source: SARS Budget 2026/27 Tax Pocket Guide — Section 6, Income Tax Act 58 of 1962.
What is the personal income tax rebate in South Africa for 2026/27?
Three rebates apply: primary R17,820 for all individual taxpayers; secondary R9,765 for persons aged 65+; tertiary R3,249 for persons aged 75+. Rebates are cumulative — a person aged 75+ receives all three totalling R30,834. Rebates reduce tax payable directly, not taxable income. Source: Section 6(2), Income Tax Act 58 of 1962.
What is the tax-free threshold in South Africa for 2026/27?
Tax-free thresholds for 2026/27: R99,000 per year for individuals below age 65 (R8,250 per month); R153,250 for those aged 65 to below 75 (R12,771 per month); R171,300 for those aged 75 and above (R14,275 per month). Income below these amounts is not taxed. Source: SARS Budget 2026/27 Tax Pocket Guide.
How does the medical scheme fees tax credit work in South Africa?
The medical scheme fees tax credit under Section 6A reduces tax payable directly. For 2026/27: R376 per month for the main member, R376 for the first dependant, R254 for each additional dependant. A taxpayer with a spouse and two children (four members) has a monthly credit of R1,260 and an annual credit of R15,120. The credit applies only to registered medical schemes under the Medical Schemes Act — not gap cover or hospital cash plans.
What is the interest exemption for South African individuals in 2026/27?
Under Section 10(1)(i), individuals below age 65 may exempt R23,800 of interest income per year. Individuals aged 65 and older may exempt R34,500. The exemption applies to South African interest only — bank accounts, fixed deposits, money market funds, RSA Retail Bonds. Foreign interest is fully taxable. Interest above the threshold is taxed at the marginal rate.
What is provisional tax in South Africa and who must pay it?
Provisional tax applies to taxpayers who earn income beyond remuneration — rental income, freelance income, business income, or investment income above the interest exemption. Two compulsory IRP6 payments: first by 31 August, second by 28 February. Underestimating by more than 20% of actual taxable income triggers a 20% underestimation penalty. Interest on underpayments accrues at 10.25% per annum from the due date.
How is tax calculated on a retirement lump sum in South Africa?
Retirement lump sum benefits use the Second Schedule table: first R550,000 tax-free (cumulative lifetime); R550,001–R770,000 at 18%; R770,001–R1,155,000 at R39,600 plus 27%; above R1,155,000 at R143,550 plus 36%. The table is cumulative — prior retirement benefits reduce the tax-free and concessionary portions. SARS issues a tax directive to the fund before payment.
What is transfer duty in South Africa and when does it apply?
Transfer duty under the Transfer Duty Act 40 of 1949 applies to second-hand property purchases not subject to VAT. Zero on the first R1,210,000; 3% on R1,210,001–R1,663,800; R13,614 + 6% on R1,663,801–R2,329,300; R53,544 + 8% on R2,329,301–R2,994,800; R106,784 + 11% on R2,994,801–R13,310,000; R1,241,456 + 13% above R13,310,000. Paid within six months of acquisition through the conveyancing attorney.
What deductions can reduce my taxable income in South Africa?
Key deductions: retirement fund contributions (Section 11F — 27.5% of remuneration or taxable income, maximum R430,000 per year); business expenses for self-employed individuals (Section 11(a)); Section 18A donations to approved public benefit organisations (up to 10% of taxable income); assessed losses carried forward from prior years; and certain medical expenses through the Section 6B additional medical credits. All deductions require supporting documentation.
How do I calculate my effective income tax rate in South Africa?
Effective rate = total tax payable after all rebates and credits ÷ taxable income × 100. For example, at R500,000 taxable income: tax from the table is R116,237, less primary rebate R17,820 = R98,417 tax payable. Effective rate = R98,417 ÷ R500,000 = 19.7%. The marginal rate (31%) is the rate on the top slice of income — significantly higher than the effective rate due to the progressive bracket structure and the primary rebate.
RELATED TOOLS & GUIDES
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Calculate 2026/27 income tax from taxable income — all brackets, rebates, and medical credits applied.
s6 Income Tax Act 58/1962
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Open →Wandile Lokwe
FAIS Key Individual · CenturionAI (Pty) Ltd · Centurion, Gauteng
20 years in South African financial services. Founder of CenturionAI (Pty) Ltd — the SA Professional Financial Services MCP Server, FinPlan AI, SmartDoc AI, and LeadRevive. All personal tax figures on this page are verified against the SARS Budget 2026/27 Tax Pocket Guide and the Income Tax Act 58 of 1962.
wandile@centurionai.co.za · 081 344 8722
Personal income tax is governed by the Income Tax Act 58 of 1962 as amended by the Taxation Laws Amendment Act following each annual Budget. The tax brackets, rebates, thresholds, medical credits, and interest exemptions on this page apply to the 2026/27 year of assessment (1 March 2026 to 28 February 2027). Worked examples are illustrative and simplify individual circumstances. Actual tax liability depends on the specific composition of income, allowable deductions, fringe benefits, assessed losses, foreign income, and other factors determined on submission of the annual ITR12 return via SARS eFiling. This page does not constitute tax advice. Consult a registered tax practitioner for personalised tax planning and return preparation. All figures should be verified at sars.gov.za before use in any formal calculation or client document.