- The government is planning tax adjustments and incentives to ease pressure on households and businesses.
- Tax-free savings limits and retirement deduction limits will be increased to encourage long-term investing.
- The VAT registration threshold for small businesses will more than double to reduce administrative burden.
South Africa's Finance Minister, Enoch Godongwana, unveiled a series of tax measures aimed at reducing financial pressure on households and businesses, including inflation-linked adjustments to income tax brackets and deductions.
Godongwana to present the budget of 2026-2027 on 25 February Said The country's national savings and investment rates remain below the levels needed to create long-term wealth and sustain domestic investment.
To encourage South Africans to save more, the government is planning to increase the annual tax-free investment limit from 36,000 rand to 46,000 rand. The tax-deductible retirement contribution limit will also increase from 350,000 rand to 430,000 rand, allowing individuals to set aside more money each year without a tax penalty.
Relief for small businesses has also been announced in the budget. The mandatory value-added tax (VAT) registration threshold will increase from 1 million rand to 2.3 million rand, a move aimed at reducing administrative requirements for small companies.
Additionally, the government plans to extend capital gains tax relief to older business owners who sell their companies. According to the Finance Minister, the exemption will now apply to businesses with turnover of up to 15 million rand, up from the previous limit of 10 million rand.
These measures come as South Africa's macroeconomic indicators show signs of improvement. Economic growth is expected to reach about 1.6% in 2026, compared to 0.4% in 2024.
Inflation has also reduced slightly. Consumer price inflation was 3.5% in January 2026, down from 3.6% in December 2025, supported by stable food prices and low fuel costs.
Data from Statistics South Africa (Stats SA) shows that households rate their financial situation as slightly better than a decade ago. Still, many say their income is insufficient to meet everyday needs.
Low inflation can help reduce operating costs for small and medium-sized businesses and ease pressure on input prices. This could create a more favorable environment for investment and hiring at a time when unemployment has started to decline.
According to Stats SA, South Africa's unemployment rate is set to fall to 31.9% in the third quarter of 2025, down 1.3 percentage points from the previous quarter.
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