The government has officially withdrawn it R20 billion tax increase for Value Added Tax (VAT) It was earlier included in the 2026 budget to provide inflation relief to taxpayers.
Finance Minister presented the budget of 2026 in Parliament on Wednesday Enoch Godongwana Explained that this comeback was due to the tax system demonstrating flexibility despite slow economic growth.
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'Improving in-year outlook'
“For 2025/26, gross tax revenues have been revised upward to R21.3 billion compared to the 2025 budget estimate. Higher-than-expected net VAT, corporate income tax and dividend tax collections have improved the year-on-year outlook.
“As a result, the government has decided to withdraw the R20 billion tax increase temporarily included in the May 2025 budget. The improving fiscal position gives us enough room to withdraw the proposed tax increase, without risking fiscal stability or economic activity,” the minister said. Said There was applause at the joint sitting of Parliament in Cape Town.
reduce financial burden
The government is also proposing additional tax measures to reduce the financial burden on households and businesses by adjusting personal income tax brackets and exemptions fully in line with inflation.
“Our national savings and investment rates are actually well below the levels needed to create generational wealth and support local investment in the economy,” he said.
The government proposed this to encourage South Africans to save more Tax free Annual investment limit should be increased from r36000 To r46000 Per year.
Also, the retirement fund deduction limit should be increased R350 000 To r430000Allows individuals to invest more each year on a tax-free basis.
VAT registration for small business
The government has increased the mandatory VAT registration threshold from R1 million to R2.3 million.
“We are taking other measures to support small businesses. We are increasing the capital gains tax exemption on the sale of a small business for older persons to R2.7 million from R1.8 million. This applies to small businesses to R15 million instead of the previous R10 million. This will enable small business owners to get greater tax relief when they sell their business,” the minister said.
commit a sin
Consumers can expect to pay more for tobacco, alcohol and petrol from April 1, 2026.
Increase in some taxes is inevitable. For 2026/27, excise duty on tobacco will be increased in line with inflation. This includes excise taxes on electronic nicotine and non-nicotine delivery systems.
As a result:
• Tax on 20 packs of cigarettes has increased from R22.81 to R23.58.
• Pipe tobacco increased by 28 cents per 25 grams and cigarette tobacco by 87 cents per 50 grams.
• Cigars increased by R4.56 per 23 grams
Excise duty on alcoholic beverages also increases due to inflation.
Thus:
• A 340ml can of beer or cider increases by eight cents
• The price of a 750 ml bottle of wine increases by 15 cents
• A 750ml bottle of spirits will increase by R3.20
In terms of fuel duty, the overall increase will also be in line with inflation.
• The general fuel levy will increase by nine cents per liter for petrol and eight cents per liter for diesel.
• The carbon fuel levy will increase by five cents per liter for petrol and six cents per liter for diesel.
• The road accident fund levy will increase by seven cents per litre.