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The South African Revenue Service (SARS) increased daily subsistence allowance rates for the 2027 tax year, effective March 1, 2026. For overnight business travel within South Africa, the tax-exempt rate for meals and incidental costs rises from ZAR 570 to ZAR 595 (4.4% increase), and incidental costs only from ZAR 176 to ZAR 184 (4.5% increase). Part-day travel reimbursements also increase from ZAR 176 to ZAR 184. Employers must update payroll systems to apply these new thresholds for PAYE withholding purposes under Section 8(1) of the Income Tax Act No. 58 of 1962.
South Africa Raises Subsistence Allowance Rates for 2027 Tax Year
The South African Revenue Service (SARS) increased daily subsistence allowance rates for the 2027 tax year, effective 2026-03-01. For overnight business travel within South Africa, the tax-exempt rate for meals and incidental costs rises from ZAR 570 to ZAR 595, while the rate for incidental costs only increases from ZAR 176 to ZAR 184.
Who is affected
All employers in South Africa who provide subsistence allowances or advances to employees for business travel are affected. The updated rates apply to employees who spend at least one night away from their usual place of residence on business within South Africa, as well as employees who travel away from their usual place of work during the day without an overnight stay.
What's changing
The 2027 tax year rates represent a 4.4% increase for meals and incidental costs and a 4.5% increase for incidental costs only:
| Category | 2026 Rate (ZAR) | 2027 Rate (ZAR) | Change |
|---|---|---|---|
| Overnight: meals and incidental costs | 570 | 595 | +4.4% |
| Overnight: incidental costs only | 176 | 184 | +4.5% |
| Part-day travel reimbursement | 176 | 184 | +4.5% |
These rates determine the maximum amounts employers can reimburse employees without triggering PAYE (Pay As You Earn) withholding obligations under Section 8(1) of the Income Tax Act No. 58 of 1962. Reimbursements at or below these thresholds remain tax-exempt for employees. Foreign subsistence allowance rates remain unchanged from 2026.
What NEO partners and clients should do
- Update payroll systems to reflect the new ZAR 595 and ZAR 184 thresholds before 2026-03-01
- Review existing travel and expense policies to incorporate the updated rates for the 2027 tax year
- Ensure PAYE withholding calculations apply the correct thresholds for subsistence allowances paid on or after 2026-03-01
- Consult SARS Guide PAYE-GEN-01-G03 for detailed guidance on the tax treatment of allowances and advances
Sources
- https://www.sars.gov.za/tax-rates/employers/subsistence-allowances-and-advances/
