As South African households continue to grapple with cost-of-living pressures, attention is turning to the 2026 budget speech for potential tax relief. For many consumers, this announcement represents more than just fiscal policy – it's a test of whether the government can adapt to the fiscal stress that has persisted in recent years.
Although individual income tax rates have not been increased, the failure to adjust tax brackets for inflation in 2024 and 2025 effectively increases the burden on taxpayers. This so-called bracket creep has quietly destroyed disposable income, leaving many South Africans hopeful that the upcoming budget will provide meaningful relief.
“Bracket creep occurs when your salary increases due to inflation, but the tax bracket is not adjusted accordingly. As a result, taxpayers may find themselves paying more tax even if their actual purchasing power has not improved,” explains Emile du Plessis, Head of Economic and Behavioral Analytics at Standard Bank Personal and Private Banking.
Because South Africa operates a progressive tax system, even inflation-linked salary adjustments can push salaried employees into a higher tax bracket. This increases the proportion of income tax paid to the South African Revenue Service (SARS). Historically, the National Treasury adjusted tax brackets to neutralize this effect. The absence of such adjustments in consecutive years is likely to place significant strain on the finances of some households.
Du Plessis says, “After two years of bracket creep, taxpayers can hope that the 2026 budget will finally include a meaningful inflation adjustment. If the budget again makes no adjustments, households will need to reevaluate their spending and cut costs, especially when many living expenses are rising faster than inflation.”
Another pressure point is the medical tax credit, which remains unchanged since the 2023 budget. At the same time, Medicare premiums and out-of-pocket health care costs continue to rise.
What else should consumers look for?
Beyond personal income tax, Budget 2026 may also indicate how the government plans to manage broader domestic cost pressures. Consumers should pay close attention to:
– Indirect taxes, such as fuel duty and sin tax
– VAT changes, including whether zero-rated foods will be expanded to reduce food inflation
– Relief for middle-income people, who are often left out of social supports but bear the brunt of rising taxes
– Cost of servicing government debt Limited government finances may limit the scope for broad-based tax cuts.
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