National Budget Speech 2026
On 25 February 2026, National Treasury presented South Africa’s 2026 Budget Speech. For many employers and employees, one of the main takeaways is that personal income tax brackets and rebates have been adjusted for inflation, alongside updates to certain taxable allowances and credits.
We have already implemented the necessary changes to our system to ensure that your payroll remains compliant with the tax changes. From 1 March 2026, your payroll will automatically meet all the requirements for the 2026/2027 tax period. If you are still processing payroll for the 2025/2026 tax year, our system will continue to apply the old tax tables.
In this blog, we briefly discuss how these announced changes, all effective from 1 March 2026, will affect your payroll.
2026/2027 Tax Rates and Rebates
With the aim of providing inflation relief to individuals, Treasury has adjusted the personal income tax brackets and rebates. These adjustments increase the annual tax-free threshold for persons under the age of 65 from R 95,750 to R 99,000.
Annual tax thresholds
| Age band | Previous | New |
|---|---|---|
| Under 65 | R 95,750 | R 99,000 |
| 65 to under 75 | R 148,217 | R 153,250 |
| 75 and older | R 165,689 | R 171,300 |
Tax rebates
| Rebate type | Previous | New |
|---|---|---|
| Primary rebate | R 17,235 | R 17,820 |
| Secondary rebate (65+) | R 9,444 | R 9,765 |
| Tertiary rebate (75+) | R 3,145 | R 3,249 |
Tax rates (from 1 March 2026 – 28 February 2027)
| Taxable income | 2026/27 |
|---|---|
| R 1 – R 245,100 | 18% of taxable income |
| R 245,101 – R 383,100 | R 44,118 + 26% above R 245,100 |
| R 383,101 – R 530,200 | R 79,998 + 31% above R 383,100 |
| R 530,201 – R 695,800 | R 125,599 + 36% above R 530,200 |
| R 695,801 – R 887,000 | R 185,215 + 39% above R 695,800 |
| R 887,001 – R 1,878,600 | R 259,783 + 41% above R 887,000 |
| R 1,878,601 and above | R 666,339 + 45% above R 1,878,600 |
Medical Aid Tax Credits
The medical aid tax credits applicable to members and dependants will increase as follows:
- Main member and first dependant (each): R 364 → R 376 per month
- Every additional dependant: R 246 → R 254 per month
Subsistence Allowances
Where an employee is entitled to a subsistence allowance, the local daily deemed amounts will increase as follows:
- Incidental costs only: R 176 → R 184 per day
- Meals and incidental costs: R 570 → R 595 per day
Rates per Kilometre
SARS has updated the travel allowance tables and the alternative reimbursive rate (fixed rate per kilometer used when calculating travel allowances):
- Alternative rate per kilometre: R 4.76/km → R 4.95/km
ETI (Employment Tax Incentive)
At this stage, no ETI changes have been specifically announced for the 2026/27 tax year.
As always, if any ETI changes arise from related legislation or subsequent publications (for example, changes linked to the National Minimum Wage), we’ll make sure the system supports compliance, and we’ll guide users on what (if anything) they need to update.
National Minimum Wage
For General workers, the minimum wage rate has been increased by R 1.44 per hour (5%), from R 28,79 to R 30,23. The wage rates set in the various sectoral determinations have also been increased proportionally. For more details, please refer to this media statement by the Minister of Employment and Labour.
Retirement Fund Contributions
The overriding monetary cap on taxable income deductions for total contributions to retirement funds has been increased from R 350,000 to R 430,000.
We trust that this information will be useful to you. If you have any questions on how the information provided relates to SimplePay, you can contact us at support@simplepay.cloud.
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Take care,
Team SimplePay