South Africa: Regulations Change - 1 March 2026

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

Tax Rebates

Tax Threshold

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

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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