I don't usually cover all the tax changes in South Africa, but after reviewing a number of changes this year, there are some really good changes. Due to a fair number of changes being positive, I felt it was worth publishing something as this is exciting news - which feels quite unique. So, I've detailed 9 things that I was able to pick up on, and I've attempted to break them down in a manner that I feel is mostly 'plain English' - Well, I hope so at least.
So, let's jump right into things:
1️⃣ Income Tax Brackets Adjusted (Up 3.4%)
The income tax brackets and rebates have increased slightly (about 3.4%).
What this means:
- You can earn a little bit more before moving into a higher tax bracket.
- Sadly, the increase is smaller than inflation.
- So most salaried people will still feel some “bracket creep” (paying slightly more tax as salaries rise).
👉 In short: Small relief, but not a big tax saving.
2️⃣ Tax-Free Savings Account (TFSA) – Big Increase
- Annual contribution limit increased from R36,000 to R46,000 per year
- Lifetime limit remains R500,000 (argh!)
What this means:
- You can now invest an extra R10,000 per year, tax-free.
- All growth and withdrawals remain tax-free.
- BUT you still can’t contribute more than R500k over your lifetime.
👉 This is a meaningful win for long-term investors, bonus for those who started contributing later and great for those who want to hit their lifetime limit faster.
PS. Don't forget about your children, I've covered that here.
3️⃣ Retirement Fund Contribution Cap Increased
- Annual deductible limit increased from R350,000 to R430,000
- You can still deduct up to 27.5% of taxable income
- You hit the new R430k cap if you earn more than ~R1.56 million per year
What this means:
- High earners can now deduct more retirement contributions, reducing taxable income further.
- Most middle-income earners won’t reach this cap, though.
👉 Primarily benefits higher earners.
4️⃣ Medical Aid Tax Credits – Small Adjustment
There has been a small increase in medical tax rebates.
What this means:
- Slightly higher monthly tax credit per beneficiary.
- The change is small and won’t dramatically reduce tax.
5️⃣ Travel & Subsistence Allowances Increased
- Daily subsistence allowances increased by 4.4%
- Vehicle travel allowance tables increased
What this means:
- If your employer pays you for business travel, the tax-free amounts are slightly higher.
- Helps counter fuel and travel cost increases.
6️⃣ Small Business Tax Changes
- Small Business Corporation (SBC) tax brackets adjusted slightly.
- Micro-business tax brackets increased more significantly.
What this means:
- Small businesses get minor relief.
- Very small (turnover-tax) businesses benefit more.
7️⃣ Capital Gains Tax (CGT) – Exemptions Increased
The tax rate hasn’t changed — but the amount you can earn tax-free before CGT kicks in has increased.
✔ Annual CGT Exemption
- Increased from R40,000 to R50,000 (small, but we'll take it!)
👉 First R50k of capital gains per year is tax-free.
✔ Primary Residence Exemption
- Increased from R2 million to R3 million
👉 When selling your home:
- First R3m of profit is tax-free.
This is fantastic for property owners 🙂
✔ Small Business Sale (Age 55+)
- Exclusion increased from R1.8m to R2.7m
- Business value limit increased from R10m to R15m
👉 Older business owners get more relief when selling their business.
✔ Year of Death Exemption
- Increased from R350k to R400k
👉 Slightly more capital gains excluded in estate calculations.
8️⃣ Donations Tax Increase
- Tax-free donations limit increased from R100k to R150k per year (Excellent!)
- Donations above this still taxed at 20%
👉 You can now gift more money each year without triggering donations tax.
9️⃣ SARS Interest Rates Reduced
- Most SARS interest rates reduced by 1%
- Interest on low-interest or interest-free loans reduced slightly to 7.75%
👉 If you owe SARS, the interest charged is slightly lower.
👉 If you structure loans between connected parties, rules still apply.
--
If you're interested in doing some more reading, here are the resources:
