Use TaxTim's free SARS local interest tax calculator to work out how much of your South African interest income is actually taxable for the 2027 tax year (1 March 2026 – 28 February 2027, also written 2026/2027). Every individual gets an annual interest exemption under section 10(1)(i) of the Income Tax Act, so only the interest above that threshold is added to your taxable income. Enter your total local interest and your age below to see your exempt and taxable amounts instantly.
The calculator applies the section 10(1)(i) local interest exemption, the annual amount of South African interest income that every natural person can earn tax-free. It takes the total local interest you received during the tax year, subtracts the exemption that matches your age, and shows the remaining (taxable) portion. If your interest is below the exemption, the taxable amount is R0. The exemption is R23,800 if you are under 65, and a larger R34,500 if you are 65 or older on the last day of the tax year. The taxable balance is not taxed at a flat rate. It is added to your other income and taxed at your marginal rate per the SARS individual tax brackets. Remember the exemption applies only to local interest; foreign interest has no exempt portion. You declare the full interest figure in the Investment Income section of your ITR12, and SARS applies the exemption automatically.
Annual local interest exemption under section 10(1)(i) (2027 tax year; unchanged for several years)
| Taxpayer age (on last day of tax year) | Annual interest exemption |
|---|---|
| Under 65 | R23,800 |
| 65 and older | R34,500 |
Example (2027 tax year): Thandi is 40 years old and earned R34,600 in local interest from her savings and a fixed deposit during the year. As she is under 65, her exemption is R23,800.
That R10,800 is added to Thandi's other income and taxed at her marginal rate. If she were 65 or older, her exemption would be R34,500, leaving only R100 taxable.
For the 2027 tax year (1 March 2026 – 28 February 2027), the first R23,800 of local interest is tax-free if you are under 65, and R34,500 if you are 65 or older. This section 10(1)(i) exemption has been unchanged for many years. Only interest above your threshold is taxed.
No. The section 10(1)(i) exemption applies only to interest from a South African source. Foreign interest has no exempt portion and is fully taxable in your hands, though a foreign tax credit may apply. Declare local and foreign interest separately in the Investment Income section of your ITR12.
Interest above your exemption is not taxed at a flat rate. It is added to your other taxable income and taxed at your marginal rate according to the SARS individual tax brackets. So your effective rate on the taxable interest depends on your total income for the year, anywhere from 18% up to 45%.
Yes. You must declare your full local interest in the Investment Income section of your ITR12, even if it is below R23,800 (or R34,500 if 65+). SARS applies the exemption automatically and your taxable interest will show as R0 when the total is under your threshold.
Yes. Interest credited to the Medical Savings Account portion of your medical aid, and interest from South African Retail Savings Bonds, is local interest and counts toward your R23,800 or R34,500 annual exemption. Your medical scheme or institution reports it to SARS on an IT3(b) certificate.
SARS uses your age on the last day of the tax year, 28 February. If you turn 65 on or before 28 February in the relevant year, you qualify for the higher R34,500 exemption for that whole tax year; otherwise the R23,800 under-65 exemption applies.
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