South Africa has implemented adjustments to personal income tax thresholds as part of its 2026 Budget, signalling a shift towards modest taxpayer relief while maintaining fiscal stability. Announced during the February 2026 Budget speech, the changes took effect from 1 March 2026 and are now influencing payroll calculations and employee net pay across the country.
Legislative Context
The 2026 Budget introduced updates to individual income tax thresholds and rebates, marking a return to inflation linked adjustments following a period of limited change in prior years.
According to guidance published by the South African Revenue Service in its Budget 2026 overview, tax brackets for the 2026 to 2027 tax year have increased by approximately 3.4 percent, helping to offset the effects of bracket creep where employees are pushed into higher tax bands without a corresponding increase in real earnings.
While similar adjustments were introduced in earlier budgets, the 2026 update reflects a more measured approach compared to previous years where thresholds remained largely unchanged.
Key Changes to Income Tax
The revised personal income tax structure retains the progressive system, with marginal rates unchanged but thresholds adjusted upward.
The main updates are as follows:
As outlined in the latest SARS tax tables for 2026, these changes have applied since 1 March 2026 and are now reflected in payroll calculations.
Impact On Payroll and Workforce Planning
For employers, the updated thresholds require payroll systems to reflect the revised PAYE calculations.
Areas to review include:
Although the adjustments provide some relief, their modest scale means broader cost pressures may continue to influence workforce expectations.
Broader Tax Measures
Alongside personal income tax updates, the Budget includes targeted measures affecting businesses and smaller enterprises.
These include adjustments to thresholds for small business regimes and continued alignment with international tax standards, while the corporate income tax rate remains unchanged at 27 percent.
What Employers Should Do Next
With the new tax year now underway, organisations should ensure that all required changes have been implemented correctly.
Employers should consider:
Allen Moyo, our Africas Payroll Delivery Manager, explains: “The adjustment to tax brackets is coming into effect after 3 years."
South Africa – Global Insights
For further detailed guidance on payroll, employment taxation and compliance in South Africa, including the impact of Budget 2026 changes, visit our South Africa Global Insights on the activpayroll website.
Next Steps
For more information on the updated tax thresholds and how they are affecting your workforce, complete our Contact Us form and a member of our expert team will be happy to provide personalised guidance and support.