SARS Tax Brackets 2026/2027 Explained Simply

South Africa's income tax system confuses many people. The biggest misconception is that moving into a higher tax bracket means all your income gets taxed at the higher rate. This is not how it works. Here is a clear, plain-English explanation of how SARS taxes your income for the 2027 tax year (1 March 2026 – 28 February 2027).

The 2027 Tax Year Brackets

Here are the official SARS income tax brackets for the 2027 tax year, verified against the SARS website:

Taxable Income	Rate	Tax Formula
R0 – R245,100	18%	18% of taxable income
R245,101 – R383,100	26%	R44,118 + 26% of amount above R245,100
R383,101 – R530,200	31%	R79,998 + 31% of amount above R383,100
R530,201 – R695,800	36%	R125,599 + 36% of amount above R530,200
R695,801 – R887,000	39%	R185,215 + 39% of amount above R695,800
R887,001 – R1,878,600	41%	R259,783 + 41% of amount above R887,000
R1,878,601+	45%	R666,339 + 45% of amount above R1,878,600

How Progressive Tax Works — A Simple Example

Let us say you earn R400,000 per year. Many people think they pay 31% on all of it. Here is what actually happens:

• First R245,100 is taxed at 18% = R44,118
• Next R138,000 (R383,100 − R245,100) is taxed at 26% = R35,880
• Remaining R16,900 (R400,000 − R383,100) is taxed at 31% = R5,239
• Total gross tax: R85,237
• Less primary rebate: −R17,820
• Net PAYE: R67,417/year = R5,618/month

Your effective tax rate is R67,417 ÷ R400,000 = 16.9% — not 31%. The 31% only applies to the last R16,900 of income above the third bracket threshold.

Tax Rebates — What Are They?

A rebate is a fixed amount that is subtracted from your gross tax calculation. Unlike a deduction (which reduces your taxable income), a rebate directly reduces your tax bill. For the 2027 tax year:

Rebate	Who Qualifies	Annual Amount
Primary rebate	All taxpayers	R17,820
Secondary rebate	Taxpayers aged 65 – 74	+R9,765
Tertiary rebate	Taxpayers aged 75+	+R3,249

The primary rebate means that anyone earning below approximately R99,000/year (R8,250/month) pays no income tax at all — because the rebate wipes out their entire tax liability.

Tax Thresholds — The Tax-Free Amount

The tax threshold is the income level below which you pay no tax. It is derived from the primary rebate divided by the 18% rate:

• Under 65: R99,000/year (R8,250/month) — no tax below this
• 65 – 74: R153,250/year — no tax below this
• 75+: R171,300/year — no tax below this

Marginal Rate vs Effective Rate

These two terms cause a lot of confusion:

• Marginal rate: The rate that applies to your last (highest) rand of income. If you earn R400,000/year, your marginal rate is 31% — but you only pay 31% on the income above R383,100.
• Effective rate: The actual percentage of your total income that goes to tax. On R400,000 with the primary rebate, your effective rate is approximately 16.9%.

When people say "I'm in the 31% tax bracket," they mean their marginal rate is 31% — not that they pay 31% on everything they earn.

Medical Aid Tax Credits 2027

In addition to the rebates above, SARS provides medical aid tax credits that further reduce your PAYE:

Members	Monthly Credit	Annual Credit
Principal member (yourself)	R376	R4,512
First adult dependant	R376	R4,512
Each additional dependant	R254	R3,048