As we progress through 2025, understanding how your income will be taxed is crucial for better financial planning. Whether you’re an employee, entrepreneur, or freelancer, the South African Revenue Service (SARS) has released the applicable income tax brackets and updates for the 2025/2026 tax year.
This article breaks down the latest tax brackets, rebates, medical credits, and what the decision not to adjust for inflation means for your paycheck.
What Are Tax Brackets?
South Africa uses a progressive tax system, meaning individuals are taxed at higher rates as their income increases. But keep in mind—only the portion of income within each bracket is taxed at the corresponding rate.
2025/26 Personal Income Tax Brackets (for Individuals Under 65)
The 2025 Budget confirmed no changes to personal income tax rates. However, SARS did not adjust the brackets for inflation, meaning many South Africans could face fiscal drag—where inflation-driven salary increases push them into higher tax brackets, even if their purchasing power remains the same.
| Taxable Income (R) | Rates of Tax (2025/26) |
|---|---|
| 0 – 237,100 | 18% of taxable income |
| 237,101 – 370,500 | R42,678 + 26% of taxable income above R237,100 |
| 370,501 – 512,800 | R77,362 + 31% of taxable income above R370,500 |
| 512,801 – 673,000 | R121,475 + 36% of taxable income above R512,800 |
| 673,001 – 857,900 | R179,147 + 39% of taxable income above R673,000 |
| 857,901 – 1,817,000 | R251,258 + 41% of taxable income above R857,900 |
| 1,817,001 and above | R644,489 + 45% of taxable income above R1,817,000 |
Tax Rebates for 2025
Tax rebates reduce the final amount of tax owed. These remain unchanged from last year:
- Primary Rebate: R17,235 (all taxpayers)
- Secondary Rebate: R9,444 (age 65–74)
- Tertiary Rebate: R3,145 (age 75+)
Tax Thresholds
If your annual income is below the thresholds below, you pay no income tax:
- Under 65: R95,750
- Age 65–74: R148,217
- Age 75 and over: R165,689
Medical Scheme Tax Credits
Medical credits are also unchanged for the 2025/26 tax year:
- R364 per month for the taxpayer and the first dependent
- R246 per month for each additional dependent
These are applied monthly and reduce your total tax liability.
Capital Gains Tax (CGT)
If you sell property, shares, or other assets, you may be liable for CGT. The inclusion rate and effective rates remain the same:
- Inclusion rate: 40%
- Annual exclusion for individuals: R40,000
- Effective tax rate: up to 18% for individuals
VAT Remains at 15%
Although an increase to the Value Added Tax (VAT) rate was proposed in early budget discussions, the government confirmed in April 2025 that the VAT rate will remain at 15%. This decision aims to protect low- to middle-income households from further financial strain.
Key Considerations: Fiscal Drag
One of the most important aspects of this year’s tax framework is the lack of inflation adjustment to the tax brackets. If your salary increases to keep pace with inflation, you may still find yourself paying a higher rate of tax—even though your real income hasn’t increased.
How to Manage This:
- Reassess your tax strategy—consider topping up retirement annuities or contributing to tax-free savings accounts.
- Check your payslip—ensure your employer is applying the correct tax table.
- Plan for PAYE changes—monthly tax deductions may increase slightly.
Final Thoughts
While SARS has maintained the same tax rates and rebates for 2025, the failure to adjust for inflation means many taxpayers may end up paying more than expected. It’s important to stay proactive: update your income strategy, track deductions, and submit your tax return early.
For updates, calculators, and expert financial tips, stay connected with Rateweb—your trusted partner in making smarter money moves.
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As we progress through 2025, understanding how your income will be taxed is crucial for better financial planning. Whether you’re an employee, entrepreneur, or freelancer, the South African Revenue Service (SARS) has released the applicable income tax brackets and updates for the 2025/2026 tax year.
This article breaks down the latest tax brackets, rebates, medical credits, and what the decision not to adjust for inflation means for your paycheck.
What Are Tax Brackets?
South Africa uses a progressive tax system, meaning individuals are taxed at higher rates as their income increases. But keep in mind—only the portion of income within each bracket is taxed at the corresponding rate.
2025/26 Personal Income Tax Brackets (for Individuals Under 65)
The 2025 Budget confirmed no changes to personal income tax rates. However, SARS did not adjust the brackets for inflation, meaning many South Africans could face fiscal drag—where inflation-driven salary increases push them into higher tax brackets, even if their purchasing power remains the same.
| Taxable Income (R) | Rates of Tax (2025/26) |
|---|---|
| 0 – 237,100 | 18% of taxable income |
| 237,101 – 370,500 | R42,678 + 26% of taxable income above R237,100 |
| 370,501 – 512,800 | R77,362 + 31% of taxable income above R370,500 |
| 512,801 – 673,000 | R121,475 + 36% of taxable income above R512,800 |
| 673,001 – 857,900 | R179,147 + 39% of taxable income above R673,000 |
| 857,901 – 1,817,000 | R251,258 + 41% of taxable income above R857,900 |
| 1,817,001 and above | R644,489 + 45% of taxable income above R1,817,000 |
Tax Rebates for 2025
Tax rebates reduce the final amount of tax owed. These remain unchanged from last year:
- Primary Rebate: R17,235 (all taxpayers)
- Secondary Rebate: R9,444 (age 65–74)
- Tertiary Rebate: R3,145 (age 75+)
Tax Thresholds
If your annual income is below the thresholds below, you pay no income tax:
- Under 65: R95,750
- Age 65–74: R148,217
- Age 75 and over: R165,689
Medical Scheme Tax Credits
Medical credits are also unchanged for the 2025/26 tax year:
- R364 per month for the taxpayer and the first dependent
- R246 per month for each additional dependent
These are applied monthly and reduce your total tax liability.
Capital Gains Tax (CGT)
If you sell property, shares, or other assets, you may be liable for CGT. The inclusion rate and effective rates remain the same:
- Inclusion rate: 40%
- Annual exclusion for individuals: R40,000
- Effective tax rate: up to 18% for individuals
VAT Remains at 15%
Although an increase to the Value Added Tax (VAT) rate was proposed in early budget discussions, the government confirmed in April 2025 that the VAT rate will remain at 15%. This decision aims to protect low- to middle-income households from further financial strain.
Key Considerations: Fiscal Drag
One of the most important aspects of this year’s tax framework is the lack of inflation adjustment to the tax brackets. If your salary increases to keep pace with inflation, you may still find yourself paying a higher rate of tax—even though your real income hasn’t increased.
How to Manage This:
- Reassess your tax strategy—consider topping up retirement annuities or contributing to tax-free savings accounts.
- Check your payslip—ensure your employer is applying the correct tax table.
- Plan for PAYE changes—monthly tax deductions may increase slightly.
Final Thoughts
While SARS has maintained the same tax rates and rebates for 2025, the failure to adjust for inflation means many taxpayers may end up paying more than expected. It’s important to stay proactive: update your income strategy, track deductions, and submit your tax return early.
For updates, calculators, and expert financial tips, stay connected with Rateweb—your trusted partner in making smarter money moves.
