Written by Patrick
Posted 30 March 2026
When the Budget comes out, most people just want to know one thing: what does this mean for me? Here’s a clear, simple breakdown.
Here’s the short version: tax brackets have been adjusted, some thresholds have gone up, and a proposed R20 billion in additional tax increases has been scrapped. It’s not a dramatic Budget, but there are real wins worth knowing about.
Let’s break it all down in plain English.
First, the big picture
Finance Minister Enoch Godongwana had a tough balancing act this year. The good news is that he pulled back from some of the harsher measures that were on the table. The less good news is that fuel, alcohol, and tobacco are still getting more expensive.
On balance? A modest win for everyday taxpayers.
Your salary: you'll keep a little more each month
Most people will see a small increase in their take-home pay this year, even without a salary increase. Here’s why that happens.
Every year, most of us get a small pay rise to keep up with the rising cost of living, that’s inflation. The problem is that if the tax brackets don’t move at the same time, you end up paying more tax even though you’re not actually richer. This is called bracket creep, you’re pushed into a higher tax bracket not because you’re earning more in real terms, but simply because prices have gone up.
For the past two years, tax brackets weren’t adjusted at all, which meant South Africans quietly paid more tax without realising it. This year, SARS has finally adjusted the brackets in line with inflation, which means your take-home pay should nudge up slightly.
It doesn’t make up for the two lost years, but it’s a step in the right direction.
The threshold below which you pay no tax at all will increase to:
Updated tax brackets for 2026:
| Taxable Income (R) | Tax Rate |
|---|---|
| R1 – R245,100 | 18% of your total income |
| R245,101 – R383,100 | R44,118 + 26% on the amount above R245,100 |
| R383,101 – R530,200 | R79,998 + 31% on the amount above R383,100 |
| R530,201 – R695,800 | R125,599 + 36% on the amount above R530,200 |
| R695,801 – R887,000 | R185,215 + 39% on the amount above R695,800 |
| R887,001 – R1,878,600 | R259,783 + 41% on the amount above R887,000 |
| R1,878,601 and above | R666,339 + 45% on the amount above R1,878,600 |
Remember: you only pay the higher rate on the portion of your income that falls in that bracket, not on your total income.
Medical aid: your tax credit is going up
If you're on a medical aid, you get a medical tax credit, this is a rand amount that SARS knocks directly off your tax bill every month. Think of it as a small monthly discount on your tax, simply for having medical cover.
From March 2026, that credit increases to:
It’s not a huge jump, but it’s the first inflation-linked increase in a while, and it adds up over a full tax year.
Retirement contributions: the annual cap gets a big increase
If you contribute to a pension fund, provident fund, or retirement annuity (RA), you can deduct those contributions from your taxable income, meaning you pay less tax. This is one of the most powerful legal ways to reduce your tax bill.
The rules stay the same: you can deduct up to 27.5% of your income, but there’s always been a rand cap on how much you can claim. That cap is jumping from R350,000 to R430,000, a significant increase that will benefit higher earners who are maximising their retirement savings.
If you're not yet contributing to a retirement product, this is worth looking into, even small monthly contributions reduce your tax and build your future at the same time.
Tax-Free Savings Accounts: you can now save more
A Tax-Free Savings Account (TFSA) is exactly what it sounds like, a savings or investment account where your returns (interest, dividends, and growth) are completely free of tax. It’s one of the simplest ways to grow your money without giving a cut to SARS.
From 1 March 2026, the annual contribution limit increases from R36,000 to R46,000 per year. That’s R10,000 more you can shelter from tax each year. The lifetime limit remains at R500,000, but with the higher annual cap, you'll reach that limit sooner, so plan accordingly.
Capital Gains Tax: good news if you're selling a home or investments
Capital Gains Tax (CGT) is the tax you pay when you sell something for more than you paid for it, shares, property, or other assets. You don’t pay tax on the full profit, just on a portion of it, and only above a certain threshold.
Two meaningful changes this year:
1. The annual exclusion goes up
The first R50,000 of capital gains you make in a year is now tax-free (up from R40,000). This is the first increase since 2012. If you sell shares or a small investment property and make a modest profit, you may pay no CGT at all.
2. Selling your home just got a better tax break
When you sell the home you actually live in (your primary residence), the first R3 million of your gain is excluded from tax, up from R2 million. This is a significant improvement for homeowners, with potential savings of up to R180,000 depending on your gain and tax rate.
The inclusion rates haven’t changed, it’s still 40% for individuals.
Donations: you can give more tax-free
If you give money away, to family, friends, or individuals, Donations Tax may apply. But there’s an annual amount you can give completely tax-free, and that’s going up from R100,000 to R150,000 per year. Donations between spouses remain fully exempt, as always.
Interest on savings: no change here
If you earn interest from a bank account, fixed deposit, or money market fund, you can earn up to a certain amount before SARS taxes it. These thresholds haven’t changed:
Running a small business? There's relief here too
If you're a Small Business Corporation (SBC)
The tax-free threshold for qualifying small businesses increases from R95,750 to R99,000. Updated rates:
| Taxable Income (R) | Tax Rate |
|---|---|
| R1 – R99,000 | 0% |
| R99,001 – R365,000 | 7% on the amount above R99,000 |
| R365,001 – R550,000 | R18,620 + 21% on the amount above R365,000 |
| R550,001 and above | R57,470 + 27% on the amount above R550,000 |
If you're a micro business on Turnover Tax
This is the biggest small business win of the Budget. Turnover Tax is a simplified tax system for very small businesses, instead of tracking every expense and doing complex calculations, you just pay a small percentage of what you bring in.
The qualifying threshold has jumped from R1 million to R2.3 million in annual turnover, the first increase since 2009. And the tax-free portion has more than doubled, from R335,000 to R600,000. This means thousands more small businesses now qualify for this simpler system.
| Taxable Turnover (R) | Tax Rate |
|---|---|
| R0 – R600,000 | 0% |
| R600,001 – R950,000 | 1% on the amount above R600,000 |
| R950,001 – R1,400,000 | R3,500 + 2% on the amount above R950,000 |
| R1,400,001 and above | R12,500 + 3% on the amount above R1,400,000 |
VAT registration threshold: If your business earns less than R2.3 million per year, you no longer need to register for VAT (up from R1 million). Less admin, less compliance pressure for smaller businesses.
The things getting more expensive
Not everything in this Budget was good news.
Fuel
Every litre of petrol now costs 9c more in general fuel levy, plus an extra 5c in carbon tax. Diesel goes up by 8c and 6c respectively. The Road Accident Fund levy adds another 7c per litre. These are small per-litre increases, but they add up at the pump and feed through into the price of almost everything else.
Alcohol and tobacco
Excise duties go up by 3.4%, roughly in line with inflation. In practice:
Small increases, but they add up if it’s a daily habit.
What stays the same
A few things people often ask about didn’t change this year:
So what should you do now?
Most of these changes come into effect from 1 March 2026 (the start of the new tax year). Filing season for individuals opens in July.
Here’s what’s worth doing right now:
Tax season will be here before you know it. The better prepared you are now, the smoother it goes.
Have a question about how the Budget affects your specific situation? Ask TaxTim, we’re here to help.
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