How to calculate your income tax in South Africa

Calculating your tax correctly is essential if you want to budget effectively, claim the right deductions, and avoid any surprises when tax filing begins this month. 

In South Africa, the official tax year runs from 1 March to 28 February, and each year’s tax changes are typically announced in the National Budget Speech.

When Finance Minister Enoch Godongwana delivered the Budget Speech on 12 March 2025, he confirmed that no changes were made to this year’s personal income tax brackets, rebates, or medical tax credits.

This means that the thresholds and rates from the 2024/25 tax year remain in place, without any adjustment for inflation.

In this guide, we’ll walk you through calculating your income tax based on the latest available rates, and help you understand what to factor into your tax planning for 2025/26.

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What is income tax?

Income tax is the money individuals and businesses in South Africa are legally required to pay to the government, based on their income. It’s collected by the South African Revenue Service (SARS) and helps fund public services such as healthcare, education, roads, and policing.

For individuals, income tax is charged on earnings such as salaries, wages, rental income, freelance income, and investments. It’s calculated on a sliding scale – meaning the more you earn, the higher the percentage of tax you pay.

How is taxable income different from gross income?

There is a difference between your gross and taxable income. 

• Gross income: “This is the total amount of income earned before any deductions or exemptions are applied,” says Robyn Gilbert, individual tax team manager at Tax Consulting South Africa. It includes your salary or wages, bonuses, rental income, investment income, and other earnings.
• Taxable income: “This is the amount that remains taxable after deductions and exemptions have been applied,” explains Gilbert. These deductions include items such as retirement fund contributions, donations, your home office, equipment wear and tear, and travel allowances. “Once this is determined, tax credits and rebates can be considered. These are amounts that directly reduce the taxes you owe, such as medical aid tax credits, foreign tax credits, and rebates (primary, secondary, and tertiary) subject to your age.”

Key documents you need for tax filing  

While individual tax situations vary, taxpayers may need to collate a number of generic documents, depending on the income streams received and contributions made during the relevant tax year, says Gilbert.

If SARS selects you for auto-assessment, or you use SARS eFiling to file your tax return, some documents (e.g. your IRP5, medical certificates, retirement contributions, and interest income) will be pre-loaded and pre-populated in your return. If everything looks correct, you can accept this return as it is via eFiling or the SARS MobiApp.

Otherwise, documents you may need to collate include:

• Your IRP5/IT3(a), which is an employee tax certificate issued by your employer when the tax year ends. This document details all employer/employee-related income, deductions, and related taxes. “These can be requested from your employer – and you can request IT3(a) tax certificates from institutions or funds from which a lump sum was withdrawn or transferred during the relevant tax year,” says Gilbert. 
• The IT3(a) and tax directive indicating any two-pot withdrawals. “Many South Africans made tax withdrawals in terms of the two-pot system, and this is the first year that these funds will be included in returns,” says Michiel Claassen, director at Doughgetters Accounting.
• Salary slips if your IRP5/IT3(a) isn’t available, as they serve as proof of income and tax paid.
• Retirement annuity (RA) certificates, IT3(f), indicating your contributions to RAs, which can be claimed as deductions.
• IT3(b), (c), and (s) certificates that outline bank interest, dividends on investments, capital gains on investments, and tax-free investment income. 
• IT3(s) tax certificates if any tax-free investment contributions were made during the relevant tax year.
• Section 18(A) tax certificates, relating to any donations made towards a registered public benefit organisation.
• Medical tax certificates received from your medical aid scheme. These include policy providers’ annual certificates and proof of medical expenses not recovered by the taxpayer. “Also have invoices, proof of payment and even pharmacist-issued prescriptions to hand, which SARS started to request last year,” notes Nicci Courtney-Clarke, head of tax at TaxTim.
• A completed logbook detailing the kilometres travelled during the relevant tax year, and a copy of the vehicle purchase document(s), outlining the vehicle’s model and registration information. You can deduct personal vehicle expenses as a business expense if you’re an independent contractor, sole proprietor or freelancer, but only against the business-use portion based on logbook data. “The logbook must meet SARS requirements, or it will be rejected,” warns Courney-Clarke.
• Rental income documents, such as lease agreements, as well as proof of all relevant rental expenses (such as estate agent fees, utility bills, interest on mortgage loan statements and levies).
• Other expense invoices and receipts relating to home office usage, wear and tear on equipment, and charitable donations (you can request a Section 18A from the relevant nonprofit organisation). For home office and wear and tear, keep all your supporting calculations as well as a letter from your employer, where relevant.
• Records of any freelance/self-employment income and expenses as well as all supporting invoices and proof of payments.
• The above documents provide proof of income, indicate legitimate deductions, and are evidence of tax compliance, which helps SARS to correctly assess how much tax you owe.

SARS can audit tax returns for up to five years after filing, so keep all these documents and additional records secure.

How to calculate your income tax 

Calculating your income tax is not difficult, especially if you follow the step-by-step process below.

• Add all sources of gross income over the last tax year. This includes your salary, bonuses, rental earnings, interest, dividends, etc. using your IRP5 and income certificates for reference.
• Subtract any exempt income, such as making use of the interest exemption (up to R23,800 if you’re under 65) and certain dividend or foreign income exemptions.
• Apply allowable deductions, such as RA contributions (the annual deduction is limited to whichever is lower of the actual contribution, R350,000 or 27.5% of your taxable income), home office expenses, wear and tear of equipment, donations to nonprofit organisations, or travel expenses.
• You can also include capital gains tax, if applicable, says Claassen. This applies if you sell an asset, such as a property or shares, for more than you paid for it, resulting in a capital gain. Every individual gets an annual exclusion of R40,000 on capital gains in the 2025/26 tax year, and only 40% of the capital gain after applying the exclusion is added to your taxable income. 
• Calculate taxable income. This is your gross income (everything earned) minus exempt income (everything SARS doesn’t tax), minus deductions (specific expenses SARS allows you to subtract from your income to reduce your tax bill). SARS taxes this figure using the official income tax brackets.
• Apply the 2025/26 SARS tax brackets. The following brackets apply to individuals under 65:

• Apply relevant tax credits or rebates, such as medical tax credits (monthly SARS credits plus additional credits for qualifying expenses) and the primary, secondary, or tertiary rebate subject to your age. The following rebates will apply:

Tax calculation example

Let’s say Thabo, aged 35, earns a salary of R400,000 per year, contributes R20,000 to an RA, receives the basic medical tax credit for one person (R364/month × 12 = R4,368), and has PAYE of R78,000 deducted by his employer during the year. 

a. Thabo can subtract any allowable deductions from his gross income. In this case, the RA contribution is deductible. The annual deduction for retirement fund contributions is limited to the lowest amount of either the contribution made in the year of assessment, 27.5% of the greater of remuneration or R350,000.

Since 27.5% of R400,000 = R110,000 and the cap is R350,000, Thabo’s contribution of R20,000 is well within both limits and therefore fully deductible.

• Gross income: R400,000
• Less RA contribution: R20,000
  

b. Thabo’s taxable income of R380,000 falls into the 31% tax bracket. Apply the formula (R77,362 + 31% of income over R370,501) directly to the taxable income.

• Base tax for the bracket: R77,362
• Income amount falling into this bracket: R380,000 – R370,500 = R9,499
• Tax on this portion: R9,499 x 31% = R2,945
• Total tax before rebates/tax credits: R77,362 + R2,945 = R80,307

c. Now subtract the annual medical tax credit from the tax amount calculated in the previous step.

• Tax before credits = R80,307
• Less annual medical credit – R4,368
• Total tax before rebates = R75,939

d. Now subtract the annual rebates, since Thabo is under 65:

• Total tax before rebates = R75,939
• Rebate (assumed under 65) = R17,235, therefore R75,939 – R17,235
• Total tax payable = R58,704

Marginal vs effective tax rate explained

Marginal tax rate

The marginal tax rate is the rate at which your taxable income falls. As such, this will be the amount that determines which tax bracket you fall under. 

Example:
Thabo’s taxable income (R380,000) falls into the 31% bracket, so his marginal tax rate is 31%.

Effective tax rate

South Africa uses a progressive tax system, where different portions of your income are taxed at different rates. This means your effective tax rate – the average rate of tax across all your taxable income – will be lower than your marginal rate.

“Many taxpayers mistakenly think that moving into a higher tax bracket means all their income is now taxed at that higher rate, but this isn’t true,” says Gibson. “You still benefit from the lower rates on the first portions of your income.”

Example:

The effective tax rate is the total tax paid as a percentage of taxable income (R58,703.69 ÷ R380,000 = 15.45%)

Although Thabo’s marginal tax rate is 31%, his effective tax rate, which he’s actually paying on average, is 15.45%.

Tax rebates and thresholds

A tax rebate is an amount by which SARS reduces the taxes you owe. SARS provides three types of rebates, and these are applied after your tax has been calculated using the tax brackets.

Taking the example given above (an annual salary of R400,000), in which Thabo is below 65, only the primary rebate would apply.

Based on this, the first R95,750 of Thabo’s income is tax-free – he won’t pay any tax on that portion.

Note: if your taxable income is below these thresholds, you won’t pay tax. 

Tax tools to make life easier

If you want to streamline the process of calculating and submitting your tax return, there are excellent online tools to help:

• SARS eFiling platform. SARS eFiling is the easiest way to submit your tax return online – most of your income and deducation information is already pre-loaded so, in most cases, all you need to do is check the details and submit.
• SARS eFiling tax calculator. Once you complete your income tax return via eFiling, you have the option to use the tax calculator, which helps you estimate your tax and submit your return online.
• SARS MobiApp. This is a mobile app for filing returns, accessing tax documents, and making sure you are tax compliant.
• JustMoney income tax calculator. This tool provides you with a quick tax estimate based on your income and deductions.

These tools are free to use and will help you avoid errors, plan ahead, and file faster when tax season opens.

Important 2025 tax‑season dates

Make sure you mark the following key dates for the 2025/26 tax year in your calendar.

Why these dates matter:

• Auto-assessment period (7 – 20 July): If SARS assesses your return automatically, you’ll receive an SMS/email. If you’re satisfied, no action is required and refunds are typically paid within 72 hours. If you’re not satisfied, SARS gives you until 20 October to file a tax return, says Courtney-Clarke.
• Filing season (21 July – 20 October): If you’re non-provisional and not auto-assessed, or you were auto-assessed and need to edit your return, submit by 20 October to avoid penalties.
• Provisional taxpayers and trusts: You have until 19 January 2026 to file.

Common tax mistakes to avoid

The following tax errors are best avoided if you want to be compliant, say Gibson, Claassen, and Courtney-Clarke.

• Missing deadlines for provisional or annual return submissions.
• Assuming you don’t need to file because PAYE was deducted.
• Thinking you are a provisional taxpayer when you are not and missing the October deadline to file. This will result in penalties. If you are unsure, check your tax status here.
• Failing to disclose side income or foreign earnings.
• Claiming expenses that don’t relate to income production (e.g., personal costs).
• Uploading faxed or blurry images of medical aid certificates and receipts. SARS may reject them and disallow deductions. 
• Forgetting to declare small interest or dividends, which is why it’s important to keep proof of bank interest/dividends (IT3(b)/(c)/(s) forms), especially when income exceeds exemption thresholds.
• Claiming home office expenses without a proper home office. SARS requires pictures of the office as well as house plans.
• Forgetting to claim your RA contributions or not submitting the relevant tax certificate to SARS will cause you to lose the deductions, which means a higher tax liability. Remember to classify RA contributions correctly, with the proper IRP5 code.
• Failing to document rental income, capital gains, home office expenses, equipment wear and tear, or charitable donations (Section 18A certificates). Remember to keep proper records (invoices, receipts and supporting calculations).
• Forgetting to retain all supporting documents, which need to be kept for a minimum of five years in case of a SARS audit.
• Providing an incomplete business vehicle logbook. You need to make sure you record the opening odometer at the beginning of the tax year, the closing odometer at the end, and details for every business trip (start location, destination, business mileage, and reason for the trip). You should also record private mileage for completeness. SARS is strict with these requirements and will reject your business travel claims and tax the full allowance if your records are not satisfactory. The SARS Travel Logbook for 2025/26 is available on SARS’ website.
• Forgetting to update your tax practitioner of any changes to your status.
• Not reviewing or updating your registered details with SARS, which can delay processing or trigger verification.

 Remember:

• Late filing, missing credits or poor records can trigger administrative penalties and interest from SARS.
• Proper documentation ensures you don’t miss legitimate deductions and credits.
• Digital compliance – like using the SARS-approved app, formatting documents properly, and filing early – reduces hassles, last-minute stress, and delays.

Get tax-season ready

Now that you know how to calculate your income tax for the 2025/26 year, you’re a step closer to filing confidently. Make sure you keep all your supporting documents, double-check your figures, and submit your return on time – especially if you’re not auto-assessed by SARS.

For more information, consult the SARS eFiling guide.

FAQ's

Q: How do I calculate my income tax in South Africa?

A: According to JustMoney, you calculate South African income tax by first determining your taxable income (gross income minus deductions like RA contributions), then applying the SARS tax bracket rates for the 2025/26 year — starting at 18% for income up to R237,100. You then subtract your rebate (R17,235 for under-65s) and any medical aid tax credits to get your final tax liability.

Q: What is the tax-free threshold in South Africa for 2025?

A: JustMoney explains that for the 2025/26 tax year, South Africans under 65 pay no income tax on earnings up to R95,750 per year, thanks to the primary rebate of R17,235. Those aged 65–74 have a threshold of R148,217, and taxpayers 75 and older are exempt up to R165,689.

Q: How does the medical aid tax credit affect my income tax in South Africa?

A: The medical aid tax credit (MTC) reduces your final tax liability directly. For the 2025/26 tax year, JustMoney notes the credit is R364 per month for the main member, R364 for the first dependant, and R246 for each additional dependant. This credit is subtracted from your tax bill — not your taxable income — making it particularly valuable for lower-income earners.

Tip: Work out your take-home pay with JustMoney’s Salary Tax Calculator.