Finance Minister Enoch Godongwana has delivered some welcome relief for taxpayers in the 2026 budget – fully adjusting tax brackets and exemptions for inflation after a two-year pause.
The move effectively reverses the effect of “bracket creep”, where inflation-linked wage increases push taxpayers into higher brackets without any real increase in purchasing power.
For many South Africans, this means a little more money in their pockets.
no new tax increases
In addition to adjusting brackets, treasury R20 billion has been withdrawn Additional tax measures that were included in earlier budget plans.
Godongwana said Better-than-expected revenue collections, including VAT, corporate income tax and dividend tax, strengthened the government's fiscal position.
Gross tax revenues for 2025/26 have been revised down to R21.3 billion compared to earlier estimates, giving the government enough leeway to cancel the proposed increase.
“The improving fiscal situation gives us enough room to roll back the proposed tax increases without jeopardizing fiscal stability or economic activity,” he said.
What do the new tax brackets mean
2026/27 Tax tables shift upward Only annual cost-of-living adjustments to keep pace with inflation help prevent workers from being pushed into higher tax brackets.
Below is a summary of the updated 2026/27 personal income tax rates:
2026/27 personal income tax brackets
| taxable income | tax rate |
|---|---|
| R0 – R245,100 | 18% of taxable income |
| R245,101 – R383,100 | R44,118 + 26% of the amount above R245,100 |
| R383,101 – R530,200 | R79,998 + 31% of the amount over R383,100 |
| R530,201 – R695,800 | R125,599 + 36% of the amount over R530,200 |
| R695,801 – R887,000 | R185,215 + 39% of amount over R695,800 |
| R887,001 – R1,878,600 | R259,783 + 41% of the amount over R887,000 |
| R1,878,601 and above | R666,339 + 45% of the amount over R1,878,600 |
Updated Exemptions and Tax Limits
Exemption (2026/27):
- Primary: R17,820
- Secondary: R9,765
- Tertiary: R3,249
Tax-exempt limits:
- Under 65: R99,000
- Age 65 and over: R153,250
- Age 75 and over: R171,300
For employees receiving inflation-linked pay increases, the adjustment ensures they don't automatically fall into a higher tax bracket, a common complaint in the last two years when the brackets were frozen.
In practical terms, although it is not a tax cut, it protects taxpayers from hidden increases and preserves purchasing power in a high-cost environment.
After years of difficult fiscal conditions, 2026 offers rare good news: no new tax increases, inflation-adjusted brackets, and the government confident enough to step back from additional revenue measures.