SARS Tax Brackets 2025: Complete Income Tax Guide for South Africa
Understanding South African tax brackets is essential for calculating your tax liability accurately. This comprehensive guide covers the 2025/2026 tax year rates, rebates, thresholds, and practical examples to help you understand exactly how much tax you'll pay.
2025/2026 Tax Brackets for Individuals
The South African Revenue Service (SARS) uses a progressive tax system where higher income earners pay higher tax rates on portions of their income.
Tax Rates for 2025/2026 Tax Year (1 March 2025 – 28 February 2026)
Taxable Income Brackets:
| Taxable Income | Tax Rate | Tax Calculation |
|---|---|---|
| R0 - R237,100 | 18% | 18% of taxable income |
| R237,101 - R370,500 | 26% | R42,678 + 26% of amount above R237,100 |
| R370,501 - R512,800 | 31% | R77,362 + 31% of amount above R370,500 |
| R512,801 - R673,000 | 36% | R121,475 + 36% of amount above R512,800 |
| R673,001 - R857,900 | 39% | R179,147 + 39% of amount above R673,000 |
| R857,901 - R1,817,000 | 41% | R251,258 + 41% of amount above R857,900 |
| R1,817,001 and above | 45% | R644,489 + 45% of amount above R1,817,000 |
Tax Rebates for 2025/2026
Tax rebates directly reduce the amount of tax you owe. South Africa offers three age-based rebates:
Primary Rebate (All taxpayers): R17,235 per year
Secondary Rebate (Age 65-74): R9,444 per year (additional)
Tertiary Rebate (Age 75+): R3,145 per year (additional)
Tax Thresholds (Below Which No Tax is Payable)
Based on the rebates, here are the income thresholds for 2025/2026:
- Under 65: R95,750 per year
- Age 65-74: R148,217 per year
- Age 75+: R165,689 per year
How Tax Calculation Works: Step-by-Step
Let's break down exactly how SARS calculates your income tax:
Example 1: Annual Income of R400,000 (Under 65)
Step 1: Identify the tax bracket
- R400,000 falls in the R370,501 - R512,800 bracket
Step 2: Calculate tax using the formula
- Tax = R77,362 + 31% of (R400,000 - R370,500)
- Tax = R77,362 + 31% of R29,500
- Tax = R77,362 + R9,145
- Gross Tax = R86,507
Step 3: Apply primary rebate
- Tax after rebate = R86,507 - R17,235
- Net Tax = R69,272 per year
- Monthly tax = R5,773
Effective tax rate: 17.3% (R69,272 ÷ R400,000)
Example 2: Annual Income of R600,000 (Under 65)
Step 1: Identify the tax bracket
- R600,000 falls in the R512,801 - R673,000 bracket
Step 2: Calculate tax
- Tax = R121,475 + 36% of (R600,000 - R512,800)
- Tax = R121,475 + 36% of R87,200
- Tax = R121,475 + R31,392
- Gross Tax = R152,867
Step 3: Apply primary rebate
- Tax after rebate = R152,867 - R17,235
- Net Tax = R135,632 per year
- Monthly tax = R11,303
Effective tax rate: 22.6%
Example 3: Annual Income of R1,000,000 (Under 65)
Step 1: Identify the tax bracket
- R1,000,000 falls in the R857,901 - R1,817,000 bracket
Step 2: Calculate tax
- Tax = R251,258 + 41% of (R1,000,000 - R857,900)
- Tax = R251,258 + 41% of R142,100
- Tax = R251,258 + R58,261
- Gross Tax = R309,519
Step 3: Apply primary rebate
- Tax after rebate = R309,519 - R17,235
- Net Tax = R292,284 per year
- Monthly tax = R24,357
Effective tax rate: 29.2%
Medical Aid Tax Credits 2025/2026
Instead of deducting medical aid contributions from taxable income, you receive monthly tax credits:
Medical Aid Tax Credits:
- Main member: R364 per month (R4,368 per year)
- First dependant: R364 per month
- Each additional dependant: R246 per month
Additional medical expenses deduction:
- Available if total medical expenses exceed 7.5% of taxable income (or 4 times medical aid tax credits)
Tax on Retirement Lump Sums 2025/2026
Retirement fund withdrawals and severance packages have special tax treatment:
Retirement Lump Sum Tax Table
| Taxable Amount | Tax Rate |
|---|---|
| R0 - R550,000 | 0% |
| R550,001 - R770,000 | 18% of amount above R550,000 |
| R770,001 - R1,155,000 | R39,600 + 27% above R770,000 |
| R1,155,001 and above | R143,550 + 36% above R1,155,000 |
Note: This is a lifetime limit - amounts are cumulative across all retirement withdrawals.
Capital Gains Tax (CGT) 2025/2026
When you sell assets like property or shares:
Annual Exclusion: R40,000 per year (tax-free capital gains)
Inclusion Rates:
- Individuals: 40% of gain is taxable
- Companies: 80% of gain is taxable
- Trusts: 80% of gain is taxable
Example: You make R100,000 capital gain from selling shares
- Gain above exclusion: R100,000 - R40,000 = R60,000
- Taxable amount: R60,000 × 40% = R24,000
- Tax owed: R24,000 × your marginal rate
Tax on Interest Income 2025/2026
Interest Exemption Thresholds:
- Under 65: First R23,800 of interest is tax-free
- Age 65+: First R34,500 of interest is tax-free
Interest above these thresholds is taxed at your marginal rate.
Dividend Tax 2025/2026
Dividends Withholding Tax: 20% (deducted at source)
This is a final tax - you don't declare dividends on your tax return unless you qualify for exemptions.
Tax Planning Tips for 2025/2026
1. Maximize Retirement Contributions
Tax-deductible limits:
- 27.5% of gross income or R350,000 per year (whichever is lower)
- Contributions reduce taxable income
Example benefit:
- Income: R500,000
- Contribute: R137,500 (27.5%)
- Tax savings: ~R37,675 (at 31% marginal rate)
2. Use Your Annual Exclusions
- Capital gains: R40,000 per year
- Interest: R23,800 (or R34,500 if 65+)
- Donations: Section 18A donations are tax-deductible
3. Claim All Valid Deductions
Common deductions:
- Home office expenses (if self-employed)
- Travel expenses (business-related)
- Donations to approved organizations
- Medical expenses above threshold
4. Consider Tax-Free Savings Accounts
- Annual limit: R36,000
- Lifetime limit: R500,000
- All growth is tax-free (no CGT, dividends tax, or income tax)
5. Time Your Income and Expenses
- Defer income to next tax year if near bracket threshold
- Accelerate deductible expenses before tax year end
Common Tax Calculation Mistakes to Avoid
Mistake 1: Not Claiming Rebates
Always apply your age-appropriate rebates - they're automatic but crucial.
Mistake 2: Forgetting Medical Aid Credits
Medical aid tax credits directly reduce tax - ensure they're claimed.
Mistake 3: Miscalculating Marginal vs Effective Rate
Your highest bracket rate (marginal) ≠ tax on total income (effective rate).
Mistake 4: Missing Deductions
Track all eligible deductions throughout the year.
Mistake 5: Not Using Retirement Contribution Limits
Missing out on 27.5% deduction means paying unnecessary tax.
How to Calculate Your Monthly Tax (PAYE)
Formula for annual tax:
- Calculate gross tax from brackets
- Subtract primary rebate (R17,235)
- Subtract age rebates if applicable
- Subtract medical aid tax credits
- Divide by 12 for monthly amount
Online tools:
- SARS tax calculator: https://www.sars.gov.za
- Genius Insights tax calculator: /south-africa-income-tax-calculator
Provisional Tax Payment Dates 2025/2026
If you're self-employed or earn non-salary income:
First payment: 31 August 2025
Second payment: 28 February 2026
Third payment (if applicable): 30 September 2026
Penalties for late payment:
- 10% penalty on outstanding tax
- Interest at prescribed rate (currently 10.25% per year)
Tax Compliance Checklist 2025/2026
✅ Register for eFiling at SARS
✅ Update personal details annually
✅ Track retirement contributions
✅ Keep medical expense receipts
✅ Maintain travel logbooks (if claiming)
✅ File ITR12 before deadline
✅ Pay provisional tax on time
✅ Request tax clearance when needed
Changes from Previous Tax Years
2025/2026 vs 2024/2025:
- Tax brackets increased by ~4.7% (inflation adjustment)
- Tax thresholds increased
- Rebates increased slightly
- Medical aid credits unchanged
- Retirement contribution limits unchanged
Frequently Asked Questions
Q: Do I need to file a tax return if I earn below the threshold?
A: Not required, but recommended if you want refunds or had tax deducted.
Q: When is the tax filing deadline?
A: Individuals: 23 October 2025 (online) / 21 October 2025 (manual)
Provisional taxpayers: 20 January 2026
Q: Can I change my tax bracket?
A: No, brackets are fixed. You can only reduce taxable income through legal deductions.
Q: How do bonuses affect my tax?
A: Bonuses are taxed at your marginal rate, may push you into higher bracket.
Q: What if I can't pay my tax bill?
A: Apply for payment arrangement at SARS - don't ignore it.
Related Tax Resources
Essential SARS Services:
Tax Calculators:
Further Reading:
Conclusion
Understanding SARS tax brackets for 2025 helps you plan finances better, maximize deductions, and ensure compliance. Use the tables and examples above to calculate your tax liability accurately.
Key Takeaways:
- Progressive tax means higher income = higher rates on portions
- Tax rebates reduce final tax owed
- Effective tax rate is lower than marginal rate
- Retirement contributions offer significant tax savings
- File on time to avoid penalties
Stay informed about tax changes and consult a tax professional for complex situations.
