Tax Changes: Relief Where It Counts

No Broad-based Tax Hikes

Thanks to stronger-than-expected revenue performance, the government withdrew previously proposed tax increases totalling R20 billion, meaning no major tax hikes for most taxpayers this year.

Tax Relief for Households

To help cope with inflation and cost pressures:

• Personal income tax brackets and rebates are fully adjusted in line with inflation — protecting your take-home pay.

• The Tax-Free Savings Account (TFSA) annual limit rises from R36 000 to R46 000, giving you more room to grow savings tax-free. Overall contribution remains at R500 000

• The retirement fund deduction cap increases from R350 000 to R430 000, encouraging long-term retirement saving. Deduction remains at 27.5% of taxable income.

• Medical tax credits will increase from R364 to R376 for the first two members, and from R246 to R254 for additional members.

• Capital gains tax annual exclusion increases to R50 000 (from R40 000)

• Capital gains tax exclusion at death increases to R440 000 (from R300 000)

• Capital gains tax on primary residence sales exclusion increases to R3 000 000 (from R2 000 000)

• Increase in donations tax exemptions to R150 000 for natural persons (from R100 000)

• De minimus rule -

  • Retirement interest for commutation – increase from R247 500 to R360 000

  • Living annuity commutation – increase from R125 000 to R150 000

What this means for you: These changes help protect your income and give you more capacity to save and invest.

Fuel Levies & “Sin” Taxes

While broad-based taxes haven’t increased, some levies have been adjusted for inflation:

• The general fuel levy and Road Accident Fund levy rise slightly.

• Excise duties on alcohol and tobacco increase modestly (+3.4%).

Why it matters: These increases are relatively small but can affect daily expenses (especially fuel).

Social Support: Grants & Welfare

Social protection remains a key focus:

• Social grants will see inflation-linked increases in April and October 2026, helping millions of recipients.

• The Social Relief of Distress grant continues in its current form for the year ahead.

Why this matters: These increases help low-income households keep up with rising living costs.

Where Government Is Spending Your Money

Total government spending in 2026/27 is about R2.67 trillion. Here’s how the major areas stack up:

• Education: receives the largest share — including funds for early childhood and school nutrition programmes.

• Health: ongoing funding for HIV/AIDS programmes and doctor compensation shortfalls.

• Peace & Security: increased funding for police, defence and border management.

• Infrastructure & Jobs: transport, water, and energy projects aimed at creating jobs and growth.

Focus on basics: Over 60% of non-interest spending goes to social programmes like education, healthcare and social protection.

Reforms & Long-Term Strategy

The Budget outlines a principles-led fiscal anchor — a new legal approach to guide spending and enhance credibility over time.

Government also continues to push structural reforms in areas like:

• Energy market participation

• Transport logistics

• Training and skills development for young people entering the workforce

These reforms aim to encourage investment and improve long-term growth.

What This Means for You

✅ Your tax burden won’t increase broadly this year.
✅ You get more tax-free room to save and invest.
✅ Social grants rise to help vulnerable households.
❗ Some levies like fuel and alcohol/tobacco duty go up slightly.
📈 Government is prioritising education, infrastructure, and fiscal stability.

This Budget tries to balance support for citizens with responsible financial management — without adding major tax pain in tough times for households and businesses.

Sources - Stanlib, Moneyweb, South African Government – Official 2026 Budget Speech, NovaNews, Reuters & news analysts summaries