How do I calculate my earnings after tax? Try our income tax calculator
By Marc Sevitz · Updated
SARS levies employee’s tax monthly and employers must pay that over to SARS every month. This tax is called PAYE (Pay As You Earn). PAYE is calculated based on your taxable income. This is different to your gross income and is calculated as follows:
Taxable income = Gross income - (highest of either 7.5% of pension contribution or R1750) - 20% of travel allowance
Sometimes your gross salary includes a pension fund contribution (for when you retire) and a travel allowance too (to help you pay for work-related transport). Only 80% of your travel allowance is included in taxable income, thus we subtract 20% to calculate this value. Pension fund contributions aren't taxed in their entirety either, so deductions are limited to the highest of 7.5%, R1 750 or the actual amount.
Once you know what your taxable income is, you need to consult the SARS tax tables to find the income tax bracket that you fit into i.e. your tax rate. People have different tax rates based on how much they earn, so higher earners fall into higher income tax brackets than lower income earners. It also depends on whether you are paid weekly, every two weeks, every month or year.
You can do the above calculation on your own and search the SARS website for these tax tables, or simply consult our easy income tax calculator that does all the hard stuff for you. Try it today and see how much money is actually arriving in your bank account!
