Get Live Quote 
South Africa's 2026 National Budget adjusts personal income tax thresholds for inflation effective 1 March 2026, with the primary threshold rising to ZAR 99,000 and tax rebates increasing (primary rebate now ZAR 17,820). The compulsory VAT registration limit increases from ZAR 1,000,000 to ZAR 2,300,000 effective 1 April 2026. Additional changes include increased annual tax-free investment contributions (ZAR 46,000), retirement fund deduction limits (ZAR 430,000), and capital gains exclusions. Excise duties on alcohol and tobacco rise by 3.4% effective 25 February 2026. Employers must update payroll systems for the new tax year starting 1 March 2026.
South Africa's 2026 National Budget adjusts personal income tax thresholds for inflation effective 1 March 2026 and raises the compulsory Value-Added Tax (VAT) registration threshold from ZAR 1,000,000 to ZAR 2,300,000 effective 1 April 2026. The tax year 2026/27 runs from 1 March 2026 through 28 February 2027.
Who is affected
All individual taxpayers in South Africa are affected by the adjusted income tax brackets and rebates. Employers operating payroll in South Africa must implement the new withholding tables. Businesses with annual turnover approaching or exceeding ZAR 1,000,000 are affected by the VAT registration threshold change. Retirement fund contributors and investors using tax-free savings accounts will see increased annual limits.
What's changing
Personal income tax thresholds and rebates (effective 1 March 2026)
| Item | 2025/26 | 2026/27 |
|---|---|---|
| Tax threshold (below age 65) | ZAR 95,750 | ZAR 99,000 |
| Tax threshold (age 65–74) | ZAR 148,217 | ZAR 153,250 |
| Tax threshold (age 75+) | ZAR 165,689 | ZAR 171,300 |
| Primary rebate | ZAR 17,235 | ZAR 17,820 |
| Secondary rebate (age 65+) | ZAR 9,444 | ZAR 9,765 |
| Tertiary rebate (age 75+) | ZAR 3,145 | ZAR 3,249 |
The top marginal rate remains 45% on taxable income above ZAR 1,878,600.
VAT registration threshold (effective 1 April 2026)
Compulsory VAT registration now applies to businesses with annual taxable supplies exceeding ZAR 2,300,000, up from ZAR 1,000,000.
Other limits adjusted (effective 1 March 2026)
- Annual tax-free investment contribution: ZAR 36,000 → ZAR 46,000
- Annual retirement fund deduction: ZAR 350,000 → ZAR 430,000
- Annual capital gains exclusion: ZAR 40,000 → ZAR 50,000
- Capital gains exclusion on death: ZAR 300,000 → ZAR 440,000
- Primary residence capital gain exclusion: ZAR 2,000,000 → ZAR 3,000,000
- Micro business turnover tax threshold: ZAR 1,000,000 → ZAR 2,300,000
Excise duties (effective 25 February 2026)
Specific excise duties on alcohol and tobacco increased by 3.4%.
What NEO partners and clients should do
- Update payroll systems to apply the new tax brackets, thresholds, and rebates for the 2026/27 tax year by 1 March 2026
- Review employee tax certificates and ensure correct withholding from the first March 2026 payroll
- Assess whether any South African entities approach the new ZAR 2,300,000 VAT registration threshold and register by 1 April 2026 if required
- Communicate the adjusted retirement fund deduction and tax-free investment limits to employees before 1 March 2026
Sources
- https://www.treasury.gov.za/documents/National%20Budget/2026/PeoplesGuide/2026%20Budget%20-%20Peoples%20Guide%20-%20English.pdf
