How is income tax calculated in South Africa?
South Africa uses a progressive tax system. The more you earn, the higher the percentage of tax you pay — but only on the portion of your income that falls inside each bracket. You don't pay 31% on your whole salary just because you cross into the 31% bracket; only the rand earned above the bracket boundary is taxed at that rate.
Once your tax is calculated from the brackets, SARS subtracts rebates that everyone gets. The primary rebate (R17 820 a year in 2026/27) means the first R99 000 you earn is effectively tax-free if you are under 65. People 65 and older get an additional secondary rebate, and those 75 and older get a third tertiary rebate on top.
If you contribute to a medical scheme, you get a fixed monthly tax credit per member that reduces your PAYE further. If you contribute to a Retirement Annuity, that contribution comes off your taxable income before the brackets are applied — so your tax bill drops, although the contribution itself still leaves your bank account.
UIF (Unemployment Insurance Fund) is a separate deduction. It is 1% of your gross salary, capped at R177.12 per month. Your employer pays another 1% on your behalf.
2026/2027 Tax Brackets
| Taxable income | Tax rate |
|---|---|
R0 – R245 100 18% of taxable income | 18% |
R245 101 – R383 100 R44 118 + 26% of amount above R245 100 | 26% |
R383 101 – R530 200 R79 998 + 31% of amount above R383 100 | 31% |
R530 201 – R695 800 R125 599 + 36% of amount above R530 200 | 36% |
R695 801 – R887 000 R185 215 + 39% of amount above R695 800 | 39% |
R887 001 – R1 878 600 R259 783 + 41% of amount above R887 000 | 41% |
R1 878 601 and above R666 339 + 45% of amount above R1 878 600 | 45% |
Source: SARS, rates of tax for individuals (2027 tax year). Rebates: primary R17 820, secondary (65+) R9 765, tertiary (75+) R3 249.
Frequently asked questions
What is the tax threshold for 2026/27?▾
If you are under 65, you pay no income tax on annual earnings up to R99 000. For ages 65–74 the threshold is R153 250, and for 75 and older it is R171 300.
How is UIF calculated?▾
UIF is 1% of your monthly gross salary, capped at R177.12 per month — the cap is based on the earnings ceiling of R17 712 per month. Your employer matches this with another 1%.
Do I need to file a tax return?▾
Not always. For the 2025/26 tax year, SARS doesn't require a return only if all of these apply: you were paid by one employer for the full year with PAYE deducted, and earned no more than R500 000; you had no allowances (such as a travel allowance), company-car benefit or pay for work outside South Africa; you have no deductions to claim, such as RA contributions; and any other income was limited to small amounts SARS allows, such as a little local interest. Earning under R500 000 on its own doesn't exempt you. If any condition doesn't apply, you'll generally need to file, unless SARS has told you you've been auto-assessed.
What is the difference between PAYE and income tax?▾
PAYE (Pay-As-You-Earn) is the system your employer uses to deduct income tax from your salary each month and pay it to SARS on your behalf. The tax itself is income tax — PAYE is just how it is collected.
How do medical aid tax credits work?▾
Medical scheme fees tax credits reduce your tax payable each month. For 2026/27 it is R376 for the main member, R376 for the first dependant, and R254 for each additional dependant. The credits apply automatically through PAYE if your employer pays your scheme.