Income tax is the money you pay to the government on your earnings each year. In South Africa this system is managed by the South African Revenue Service (SARS) and it follows a progressive structure. That means people who earn more pay a higher percentage of tax on the part of income that falls into higher brackets. You do not pay the same rate on all your income, but in layers as your income increases.
The South African tax year runs from 1 March to 28 February the next year. So the 2026 tax year covers 1 March 2025 to 28 February 2026. SARS uses this period to calculate how much tax you owe.
How Tax Brackets Work
South Africa uses tax brackets to decide your tax rate. These brackets are set in law and do not change unless the Minister of Finance announces changes in the annual budget. For 2026, the brackets stayed largely the same as the previous year, which means many people pay more tax over time because inflation rises, but the brackets do not.
Here are the income tax brackets for individuals (2026 tax year):
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R0 to R237,100 taxed at 18%
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R237,101 to R370,500 taxed at 26% on the amount above R237,100, plus R42,678
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R370,501 to R512,800 taxed at 31% on amount above R370,500, plus R77,362
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R512,801 to R673,000 taxed at 36% on amount above R512,800, plus R121,475
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R673,001 to R857,900 taxed at 39% on amount above R673,000, plus R179,147
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R857,901 to R1,817,000 taxed at 41% on amount above R857,900, plus R251,258
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R1,817,001 and above taxed at 45% on amount above R1,817,000, plus R644,489
You pay each portion at its rate. For example, if you earn R300,000 a year, the first R237,100 is taxed at 18%, and only the R62,900 over that is taxed at 26%. This system prevents penalising people for earning more. Only the part above a bracket moves into the next rate.
Tax Thresholds
A tax threshold is the amount of income you are allowed to earn before you have to pay anyincome tax. For 2026:
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Under 65 years: Tax starts once you earn above R95,750
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65 to 74: Threshold is R148,217
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75 and older: Threshold is R165,689
Most working adults will earn more than R95,750 a year, so they will pay tax. But someone earning less than that pays zero income tax.
Tax Rebates and Credits
The tax system also includes rebates, which are amounts SARS subtracts from the tax you owe. Rebates are based on age:
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Primary rebate for all taxpayers
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Secondary rebate if you are 65 or older
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Tertiary rebate if you are 75 or older
These rebates reduce your final tax bill, so even if your income falls into a bracket, your net tax may be lower. Many taxpayers find this reduces their actual tax significantly.
How SARS Calculates Your Tax
Every year SARS combines all your taxable income then applies the tax brackets above to calculate your tax. Taxable income includes your salary, bonuses, and any other forms of earnings unless specific exemptions apply. SARS also considers deductions (like retirement annuity contributions or medical expenses) and rebates to reduce your final tax owed.
If you are employed, tax is normally deducted from each paycheck through a system called PAYE (Pay As You Earn). This means your employer sends tax to SARS every month based on your estimated annual income. At year end when you file a tax return, SARS reconciles what you paid with what you owe, and you either get a refund or owe a little more.
Other Important Points in 2026
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Progressive tax systems like this do not punish you for earning more because only the extra income above each bracket is taxed at higher rates.
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South Africa has not increased the tax thresholds for a few years. While this seems stable, it leads to fiscal drag, where inflation pushes people into higher tax buckets even when their real income does not increase much.
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People earning income outside South Africa, such as foreign pensions, may face new tax rules starting from 1 March 2026, especially if exemptions are removed. These changes could affect retirees and taxpayers with income abroad. (Proposed changes may apply under updates from SARS and tax laws, but you should check the latest SARS guidance or consult a tax practitioner for personal cases.)
Filing Your Return
If you earn income above the tax threshold or have extra income sources, you must submit a tax return to SARS during tax season. The return shows your total income, deductions, and tax paid. SARS then issues an assessment telling you whether you owe more tax or will receive a refund.
Companies and self-employed individuals may also pay provisional tax throughout the year. This means two or more estimated tax payments outside PAYE, based on projected income.
South Africa’s income tax system in 2026 is structured to be fairer for lower earners and progressively higher for those who earn more. You pay as you earn, the system rewards reporting income correctly, and rebates can help lower your final tax bill. Tax planning, understanding how brackets work, and tracking deductions can save money and avoid surprises at the end of the tax year.
