Statutory Alerts

Feb 27, 2026 2 min read

South Africa: Regulations Change – 1 March 2025

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On 25 February 2026, the Minister of Finance presented the National Budget for the 2026/27 fiscal year, introducing inflation-aligned adjustments to personal income tax and related payroll parameters effective 1 March 2026 as follows:

Income Tax Slabs

Taxable Income (R)	Rate of Tax
1 – 245 100	18% of taxable income
245 101 – 383 100	44 118 + 26% of taxable income above 245 100
383 101 – 530 200	79 998 + 31% of taxable income above 383 100
530 201 – 695 800	125 599 + 36% of taxable income above 530 200
695 801 – 887 000	185 215 + 39% of taxable income above 695 800
887 001 – 1 878 600	259 783 + 41% of taxable income above 887 000
1 878 601 and above	666 339 + 45% of taxable income above 1 878 600

Tax Rebates

Rebate	Amount
Primary	R17 820
Secondary (Persons 65 years and older)	R9 765
Tertiary (Persons 75 years and older)	R3 249

Tax Threshold

Age	Amount
Below age 65	R99 000
Age 65 to below 75	R153 250
Age 75 and above	R171 300

Additionally, the South African Revenue Services (SARS) issued a notice announcing new rates for subsistence and travel allowance rates as per below. The new rates are effective from 1 March 2026.

Medical scheme fees tax credit (MTC)

Monthly medical scheme fees tax credits increased for the 2027 tax year as follows:

Taxpayer (or single covered person): R364 → R376
Taxpayer + 1 dependant (or two covered persons): R728 → R752
Each additional dependant: R246 → R254

Subsistence Allowance:

Overnight Trips – Meals and incidentals: Increased from R570 to R595.
Overnight Trips – Incidentals only: Increased from R176 to R184.
Day Trips – Meals and incidentals: Increased from R176 to R184.

Travel Allowances

Motor vehicle rate per kilometre – Increased from R4.76 to R4.95.

Table for Determining Travel Allowance

Where the value of the vehicle -	Fixed Cost R	Fuel Cost (c/km)	Maintenance Cost (c/km)
Does not exceed R 115 000	38 344	132.9	49.1
Exceeds R115 001 but does not exceed R230 000	68 487	148.4	61.4
Exceeds R230 001 but does not exceed R345 000	98 689	161.2	67.8
Exceeds R345 001 but does not exceed R460 000	125 393	173.4	74.0
Exceeds R460 001 but does not exceed R575 000	152 097	185.5	86.9
Exceeds R575 001 but does not exceed R690 000	180 078	212.8	102.0
Exceeds R690 001 but does not exceed R805 000	208 106	216.5	114.5
Exceeds R805 001 but does not exceed R920 000	237 679	220.1	126.9
ExceedS 920 000	237 679	220.1	126.9

Retirement fund contribution deduction cap (PAYE allowable deduction)

The annual monetary cap on deductible retirement fund contributions increased from R350,000 → R430,000 (limit remains “lower of cap or 27.5% of relevant base”).

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change

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South Africa – Budget 2026 Changes

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