Budget summary 2025/2026
Sunday, 06 April 2025
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Posted by: Ernest Roper
 After much anticipation, the annual budget speech for the 2025/2026 fiscal year was presented by the Honourable Minister of Finance Enoch Godongwana on 12 March 2025.
Some key aspects to note:
In 2024, the economy grew by only 0.6%. Over the medium term, GDP growth is projected to average 1.8%.
- The consolidated budget deficit is expected to narrow from 5% of GDP in 2024/25 to 3.5% of GDP in 2027/28.
- Government debt will stabilise at 76.2% of GDP in 2025/26.
- Debt-service costs will amount to R389.6 billion in the current financial year. This translates to 22 cents of every rand we raise in revenue. It is more than the amount we spend on health care, police services and basic education.
- National Treasury has proposed reducing the budget deficit with tax policy proposals that are designed to raise R28 billion in additional revenue in 2025/26 and R14.5 billion in 2026/27. Key to this additional revenue is the increase in the VAT rate.
Key Budget Highlights
Personal Income Tax: Individuals and Trust
Individual tax brackets have not increased for the tax year 1 March 2025 to 28 February 2026 and remain as follows:
| Taxable income (R)
|
Rate of tax (R)
|
| R 0 – R 237 100
|
18% of taxable income
|
| R 237 101 –R 370 500
|
R 42 678 + 26% of taxable income above R 237 100
|
| R 370 501 – R 512 800 |
R 77 362 + 31% of taxable income above R 370 500 |
| R 512 801 – R 673 000
|
R 121 475 + 36% of taxable income above R 512 800
|
| R 673 001 – R 857 900
|
R 179 147 + 39% of taxable income above R 673 000
|
| R 857 901 – R 1 817 000 |
R 251 258 + 41% of taxable income above R 857 900
|
| R 1 817 001 and above |
R 644 489 + 45% of taxable income above R 1 817 000
|
The tax rate on trusts remains unchanged at 45%.
Rebates
The primary rebate has not increased and is still R17 235 per year.
The secondary rebate which applies to individuals aged 65 to 74 has not increased and is still R9 444 per year.
The third rebate which applies to individuals aged 75 and older has not increased and is still R3 145 per year.
Tax thresholds
The threshold below which individuals are not liable for personal income tax, has not increased and remains as follows:
- For persons younger than 65, it will be R95 750
- For persons between the ages of 65 to below 75, it will be R148 217
- For persons 75 years and older, it will be R165 689
Interest rate exemptions
The interest rate exemptions will not be adjusted for inflation and will therefore remain the same.
|
Under age 65
|
R23 800
|
|
Age 65 and over
|
R34 500
|
Turnover Tax – Micro Businesses
Years of assessment ending between 01 March 2025 and 28 February 2026
| Turnover (R)
|
Rate of Tax (R)
|
| R 0- R 335 000
|
Nil |
| R 335 001 - R 500 000
|
1% of the amount over R 355 000
|
| R 500 001 – R 750 000
|
R1 650 + 2% of the amount over R500 000
|
| R 750 001 – R 1 000 000
|
R 6 650 + 3% of the amount over R750 000
|
Small Business – Corporations
Years of assessment ending between 1 April 2025 and 31 March 2026
| Turnover (R)
|
Rate of Tax (R)
|
| R 0 – R95 750
|
Nil
|
| R 95 751 – R 365 000
|
7% of the amount over R 95 750
|
| R 365 001 – R 550 000
|
R 18 848 + 21% of the amount over R 365 000 |
| R 550 001 +
|
R 57 698 + 27% of the amount over R 550 000 |
Corporate Income Tax Rate
There have been no changes and the tax rate remains at 27%.
Retirement tax
There were no adjustments to the retirement tax tables.
Transfer Duty
There has been a 10% adjustment of the monetary values to the transfer duty thresholds. The transfer duty taxes remain unchanged. There is no transfer duty payable on property purchases below R1 210 000.
Medical Tax Credits
For the tax year 2025/2026, monthly medical scheme tax credits will remain the same.
Capital Gains Tax
There were no changes announced to the taxation of capital gains.
Value Added Tax
The VAT rate shall increase from 15% to 15.5% effective 1 May 2025 and to 16% effective 1 April 2026.
Estate duty and Donations Tax
There were no changes made to existing estate duty or to the current tax rate on donations.
Tax free Savings account
There were no adjustments made to the maximum contributions that may be paid into a tax-free savings account.
Excise Duties
Excise Duties on alcoholic beverages will increase by 6.75% which is above inflation. In addition, there will be an increase of 6.75% in excise duties on cigars and pipe tobacco and 4.75% on cigarettes and other tobacco products.
Fuel Levies
No change to the general fuel levy and road accident levy. However, from 2 April 2025 the Carbon Fuel Levy will increase by 3 cents on both petrol and diesel.
Carbon Tax
The Carbon Tax increased from R190 per tonne to R236 per tonne of the carbon dioxide equivalent.
Sin Tax
Increase of 6.75% in excise duties on alcoholic beverages, an increase of 6.75% in excise duties on cigars and pipe tobacco products and an increase of 4.75% in excise duties on cigarettes and other tobacco products.
Social Grants
The old age grant, war veterans grant, disability grant and care dependency grant will increase by R130 in April 2025. The Foster care grant will increase by R70 in April 2025 and the child support grant and grant-in-aid grant will both increase by R30 in April 2025.
References
- https://www.sataxguide.co.za/south-african-budget-2025-tax-proposals/
- https://www.pkf.co.za/publications/sa-tax-guides/pkf-sa-tax-guide-2025-2026/
Melessia Naidoo
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