Budget 2026: What the new tax brackets mean for your salary
The 2026 Budget Speech brings full inflation adjustments to tax brackets - here’s how much you’ll pay for how much you earn.
Finance Minister Enoch Godongwana has delivered some welcome relief for taxpayers in the 2026 Budget – fully adjusting tax brackets and rebates for inflation after two years of freezes.
The move effectively reverses the impact of “bracket creep”, where inflation-linked salary increases push taxpayers into higher brackets without any real increase in purchasing power.
For many South Africans, it means slightly more money in their pockets.
No new tax hikes
In addition to adjusting brackets, the Treasury has withdrawn the R20 billion in additional tax measures that had been pencilled into earlier budget plans.
Godongwana said improved revenue collection, including higher-than-expected VAT, corporate income tax, and dividends tax, strengthened the government’s fiscal position.
Gross tax revenue for 2025/26 has been revised up by R21.3 billion compared to earlier estimates, giving the government enough breathing room to scrap the proposed increases.
“The improving fiscal position allows us enough room to withdraw the proposed tax increases, without putting fiscal sustainability or economic activity at risk,” he said.
What the new tax brackets mean
The 2026/27 tax tables shift upward in line with inflation, helping prevent workers from being pushed into higher tax brackets simply because of annual cost-of-living adjustments.
Below is a summary of the updated 2026/27 personal income tax rates:
2026/27 Personal Income Tax Brackets
| Taxable Income | Rate of Tax |
|---|---|
| R0 – R245,100 | 18% of taxable income |
| R245,101 – R383,100 | R44,118 + 26% of amount above R245,100 |
| R383,101 – R530,200 | R79,998 + 31% of amount above R383,100 |
| R530,201 – R695,800 | R125,599 + 36% of amount above R530,200 |
| R695,801 – R887,000 | R185,215 + 39% of amount above R695,800 |
| R887,001 – R1,878,600 | R259,783 + 41% of amount above R887,000 |
| R1,878,601 and above | R666,339 + 45% of amount above R1,878,600 |
Updated rebates and tax thresholds
Rebates (2026/27):
- Primary: R17,820
- Secondary: R9,765
- Tertiary: R3,249
Tax-free thresholds:
- Below age 65: R99,000
- Age 65 and over: R153,250
- Age 75 and over: R171,300
For employees receiving inflation-linked salary increases, the adjustment ensures they are not automatically bumped into a higher tax bracket, a common complaint over the past two years when brackets were frozen.
In practical terms, while this is not a tax cut, it protects taxpayers from hidden increases and preserves purchasing power in a high-cost environment.
After years of tight fiscal conditions, 2026 offers rare good news: no new tax hikes, inflation-adjusted brackets, and a government confident enough to step back from additional revenue measures.
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