How SARS calculates your income tax
Income tax in South Africa is assessed over a full tax year, which for 2026/2027 runs from 1 March 2026 to 28 February 2027. The scale is progressive: each rate, from 18% to 45%, applies only to the part of your income that falls inside its bracket. Moving into a higher bracket never leaves you with less take-home pay, because only the rands above the bracket limit are taxed at the higher rate.
- Work out your annual taxable income. Start with gross pay, add taxable fringe benefits and the taxable part of any allowances, then subtract the deductions SARS allows, such as pension, provident and retirement annuity contributions within the annual limits.
- Apply the tax brackets. Find your bracket in the table above. Tax on the scale is the fixed amount for that bracket plus the bracket rate on the income above its lower limit.
- Subtract the rebates for your age. Everyone gets the primary rebate. The secondary rebate is added from 65 and the tertiary rebate from 75.
- Subtract medical scheme fees tax credits if you or your dependants belong to a registered medical scheme.
- The balance is your tax for the year. Divide it by 12 for the PAYE your employer should withhold each month.
Worked example: R30,000 a month
Take an employee under 65 earning R30,000 a month, with no retirement fund deductions and no medical aid, on the 2026/2027 tables.
| Annual taxable income (R30,000 x 12) | R360,000 |
| Bracket | R245,101 to R383,100 at 26% |
| Tax on the scale: R44,118 + 26% of R114,900 | R73,992 |
| Less primary rebate | (R17,820) |
| Income tax for the year | R56,172 |
| Monthly PAYE | R4,681 |
| Effective tax rate | 15.6% |
This employee's marginal rate is 26%, so another R1,000 of salary would attract R260 of tax. Across all of their income, though, they pay an average of 15.6%. Change the figures in the calculator above to repeat the calculation for any salary, or use the take-home pay calculator to include UIF and other deductions.
Rebates and tax thresholds by age
A rebate is a fixed rand amount taken off the tax calculated on the brackets. Because of the rebates, nobody pays income tax until their income passes the threshold for their age, which is the point where tax on the scale equals the rebate. Your age on the last day of the tax year, 28 February 2027, decides which rebates apply for the whole year.
| Age | Rebates | Total rebate | Tax threshold (year) | Per month |
|---|---|---|---|---|
| Under 65 | Primary | R17,820 | R99,000 | R8,250 |
| 65 to 74 | Primary + secondary | R27,585 | R153,250 | R12,771 |
| 75 and older | Primary + secondary + tertiary | R30,834 | R171,300 | R14,275 |
Monthly figures are the annual threshold divided by 12. The tax rebate calculator applies the rebates to your own income.
Medical scheme fees tax credits 2026/2027
Members of a registered medical scheme receive a fixed monthly credit that is subtracted from the tax payable, not from income, so it is worth the same to every taxpayer regardless of bracket. Where contributions go through payroll, your employer takes the credit into account when calculating PAYE; otherwise you claim it on assessment.
| Who is covered | Credit per month | Credit per year |
|---|---|---|
| Main member | R376 | R4,512 |
| First dependant | R376 | R4,512 |
| Each additional dependant | R254 | R3,048 |
A member who covers a spouse and one child receives R1,006 a month, or R12,072 for a full year of membership. The credit only applies for the months you were a member. Medical costs you pay yourself may qualify for an additional medical expenses tax credit, claimed on assessment, with more generous rules for taxpayers aged 65 and older and those with a disability. The medical aid tax credit calculator works out the credit for your family.
How PAYE works month to month
PAYE is not a separate tax. It is the system SARS uses to collect income tax from employees during the year rather than in one payment after it ends. Each month your employer calculates the tax on your pay, deducts it from your salary and pays it to SARS with the EMP201 return, due by the 7th of the following month.
Most payroll systems, including this calculator, annualise your pay: the month's taxable remuneration is multiplied by 12, tax is calculated on that annual figure using the brackets and rebates, and the result is divided by 12. While your salary stays the same, so does the deduction.
PAYE moves when your pay moves. Overtime, commission or a shift allowance raises the annualised figure for that month, so more tax is withheld. A bonus or 13th cheque is treated as an annual payment: your employer works out the tax on your annual earnings with and without the bonus and withholds the difference in the month it is paid. For the employee in the example above, a R30,000 bonus would carry about R8,145 of PAYE on top of the usual R4,681. The bonus tax calculator does this for any amount.
After the tax year closes on 28 February 2027, your employer submits its annual reconciliation (EMP501) and gives you an IRP5 certificate showing your total pay and the PAYE withheld. SARS uses it when assessing your return. If the PAYE withheld was more than the tax on your actual taxable income, for example because you paid into a retirement annuity outside payroll, you receive a refund. If it was less, which often happens when two employers each apply the full primary rebate, you owe the difference.
What changed from 2025/2026
The rates themselves, from 18% to 45%, are unchanged from 2025/2026. Every bracket limit was raised by about 3.4%. The rebates went up as well, which lifts the tax-free threshold for each age group. On an unchanged salary you pay less tax in 2026/2027: for the R30,000 a month example, annual tax falls from R57,397 to R56,172.
| Item | 2025/2026 | 2026/2027 |
|---|---|---|
| Primary rebate | R17,235 | R17,820 |
| Secondary rebate (65 and older) | R9,444 | R9,765 |
| Tax threshold, under 65 | R95,750 | R99,000 |
| Tax threshold, 65 to 74 | R148,217 | R153,250 |
| Top of the 18% bracket | R237,100 | R245,100 |
| Start of the 45% bracket | R1,817,001 | R1,878,601 |
| Medical credit, main member (monthly) | R364 | R376 |
Tax brackets and PAYE: frequently asked questions
What are the tax brackets for 2026/27?
For the 2026/2027 tax year SARS uses 7 brackets: R1 to R245,100 at 18%, R245,101 to R383,100 at 26%, R383,101 to R530,200 at 31%, R530,201 to R695,800 at 36%, R695,801 to R887,000 at 39%, R887,001 to R1,878,600 at 41%, R1,878,601 and above at 45%. Each rate applies only to the part of your annual taxable income that falls inside that bracket, and the rebates for your age are subtracted afterwards.
What is the tax-free threshold for 2026/27?
You pay no income tax in 2026/2027 if you are under 65 and your annual taxable income is R99,000 or less, which works out to about R8,250 a month. The threshold is R153,250 for taxpayers aged 65 to 74 and R171,300 for those aged 75 and older.
How much tax do I pay on a salary of R25,000 a month?
If you are under 65 and have no deductions, R25,000 a month is R300,000 a year, which falls in the 26% bracket. Tax on the scale is R58,392, less the primary rebate of R17,820, which leaves R40,572 for the year or about R3,381 a month. That is an effective rate of 13.5%.
What tax rebates apply in 2026/27?
Every individual taxpayer receives the primary rebate of R17,820. If you are 65 or older on the last day of the tax year, the secondary rebate of R9,765 is added, and from 75 the tertiary rebate of R3,249 is added as well, for a total of R30,834. Rebates reduce the tax you pay, not your taxable income.
What is the difference between PAYE and income tax?
Income tax is the tax on your total taxable income for the year, worked out with the brackets and rebates. PAYE is the amount your employer withholds from each salary payment and pays to SARS as a prepayment of that income tax. When SARS assesses your return, the PAYE shown on your IRP5 is set off against your final income tax, and any difference is refunded to you or becomes payable.
Is PAYE calculated on gross or taxable income?
PAYE is calculated on taxable remuneration. Your employer starts with gross pay, adds taxable fringe benefits and the taxable part of allowances, and subtracts approved deductions such as pension, provident and retirement annuity contributions made through payroll. This calculator treats the amount you enter as taxable income, so subtract any retirement fund contributions first for a closer estimate.
When does the 2026/27 tax year start and end?
The 2026/2027 tax year runs from 1 March 2026 to 28 February 2027. Salaries paid in that period are taxed with the 2026/2027 brackets and rebates, and your employer issues your IRP5 for the year once it has closed.
How do medical aid tax credits reduce PAYE?
If you belong to a registered medical scheme, SARS allows a monthly credit of R376 for you, R376 for your first dependant and R254 for each additional dependant in 2026/2027. The credit comes off the tax itself rather than your income, so a member with one dependant can pay up to R752 less PAYE a month.
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