South Africa’s 2026-27 tax amendments raise personal rebates, deductions, and exemptions. The changes also increase thresholds for tax-free investments, retirement contributions, capital gains, and VAT registration to ease the burden on individuals and small businesses.
The South African government has introduced the draft rates and monetary amounts and amendment of Revenue Laws Bill on 25 February 2026, outlining changes to tax legislation for the 2026/27 year. The Bill updates personal income tax brackets, rebates, exemptions, and thresholds across multiple tax categories.
Personal income tax and rebates
The Bill revises tax brackets for natural persons, deceased and insolvent estates, and special trusts. The primary rebate rises to ZAR 17,820, the secondary rebate for those aged 65+ increases to ZAR 9,765, and the tertiary rebate for those 75+ is set at ZAR 3,249. Medical scheme fees tax credits are also raised to R376 for the first two beneficiaries and ZAR 254 per additional dependant.
Exemptions and deductions
Key adjustments include:
- Retirement fund contributions: annual deduction limit raised to ZAR 430,000.
- Tax-free investments: annual contribution limit increased to ZAR 46,000.
- Long service awards: tax-free threshold rises to ZAR 16,000.
- Bursaries and scholarships: remuneration proxy for tax-exempt bursaries increased to ZAR 900,000.
- Travel allowances: wear-and-tear vehicle cost limit increased to ZAR 920,000.
Capital gains and donations tax
Capital gains tax (CGT) exclusions are expanded:
- Annual exclusion for individuals and special trusts: R50,000; in the year of death: ZAR 440,000.
- Primary residence exclusion rises to ZAR 3 million.
- Small business disposals: lifetime limit increases to ZAR 2.7 million, with maximum qualifying business value of ZAR 15 million.
- Donations tax: annual exemption for individuals raised to ZAR 150,000, and for non-natural persons to ZAR 20,000.
VAT and business tax thresholds
The Bill raises thresholds to ease compliance for smaller businesses:
- Compulsory VAT registration: ZAR 2.3 million (from ZAR 1 million).
- Voluntary VAT registration: ZAR 120,000 (from ZAR 50,000).
- Micro business turnover tax: qualifying turnover limit increased to ZAR 2.3 million.
Excise duties and carbon tax
Adjustments to Schedule 1 of the Customs and Excise Act include:
- Alcohol: unfortified wine taxed at ZAR 6.15/litre, sparkling wine at ZAR 19.68/litre.
- Tobacco: cigarette duty set at ZAR 11.79 per 10 cigarettes.
- Carbon tax: fuel levy rises from 0.99 cents to 1.29 cents/litre from 1 January 2026.
Effective Dates
Most changes to individual tax, rebates, and deductions apply from 1 March 2026, while corporate tax amendments and small business thresholds apply to years ending on or after 1 April 2026.
