Understanding your South African salary after tax

One of the most important financial numbers for any South African employee is their take-home pay — the amount that actually lands in their bank account each month. Yet most people only know their gross salary (CTC) and are surprised by the gap between what they earn and what they receive. This comprehensive calculator breaks down exactly where every rand goes, using the official SARS 2027 tax year tables effective from 1 March 2026 to 28 February 2027.

South Africa operates a progressive tax system, which means different portions of your income are taxed at different rates. Your employer deducts PAYE (Pay As You Earn) monthly, along with UIF contributions and any retirement annuity or pension fund deductions you've agreed to. Medical aid credits reduce your actual tax bill, not your taxable income. Understanding these components is essential for proper financial planning.

How PAYE is calculated step-by-step

The calculation of your monthly PAYE follows a specific sequence defined by SARS. Here's exactly how your employer calculates what to deduct:

Step 1: Determine your taxable income

Start with your gross annual salary (CTC), then subtract any allowable deductions:

  • Retirement annuity contributions: Up to 27.5% of your income, capped at R430,000 per year for the 2027 tax year.
  • Travel allowance deduction: Only 80% of a travel allowance is taxable, so 20% is automatically deducted.
  • Employer pension/provident fund contributions: These are already included in your CTC but reduce taxable income.

Step 2: Apply SARS tax brackets

Your taxable income is then applied against the progressive tax brackets. For the 2027 tax year:

  • First R245,100: 18%
  • R245,101 – R383,100: 26%
  • R383,101 – R530,200: 31%
  • R530,201 – R695,800: 36%
  • R695,801 – R887,000: 39%
  • R887,001 – R1,878,600: 41%
  • Above R1,878,600: 45%
Important: Only the portion of income within each bracket is taxed at that rate. If you earn R400,000, the first R245,100 is taxed at 18%, the next R138,000 at 26%, and only the R16,900 above R383,100 is taxed at 31%.

Step 3: Subtract rebates

After calculating the raw tax amount, SARS subtracts rebates directly from your tax bill (not your income):

  • Primary rebate: R17,820 for all taxpayers under 65.
  • Secondary rebate: Additional R9,765 for ages 65-74.
  • Tertiary rebate: Additional R3,249 for ages 75+.

The primary rebate of R17,820 creates the tax-free threshold. Since 18% of R99,000 equals R17,820, anyone earning under R99,000 annually pays zero income tax.

Step 4: Subtract medical aid credits

If you're on a registered medical aid scheme, SARS provides tax credits that reduce your PAYE directly:

  • R376 per month for the main member (taxpayer)
  • R376 per month for the first dependent
  • R254 per month for each additional dependent

Step 5: Calculate UIF

Unemployment Insurance Fund contributions are calculated at 1% of your salary, but only up to the monthly earnings ceiling of R17,712. This means the maximum UIF you can pay is R177.12 per month, or R2,125.44 per year.

Worked Example

Calculating take-home pay on R480,000 salary

Let's walk through a realistic scenario: annual salary of R480,000, under 65, with medical aid for yourself and one dependent, and 7.5% retirement annuity contribution.

Taxable income calculation:

  • Gross salary: R480,000
  • Less RA (7.5%): R36,000
  • Taxable income: R444,000

Tax calculation:

  • Tax on R444,000 = R79,998 + 31% of (R444,000 - R383,100) = R79,998 + R18,879 = R98,877
  • Less primary rebate: R17,820
  • Less medical credit (2 members × R376 × 12): R9,024
  • Net PAYE: R72,033 per year = R6,003 per month

Take-home pay:

  • Gross monthly: R40,000
  • Less PAYE: R6,003
  • Less UIF: R177 (capped)
  • Less RA: R3,000
  • Net take-home: R30,820 per month

Six legal strategies to reduce your PAYE

1

Maximize Retirement Annuity

Contributing up to 27.5% of your income (capped at R430,000/year for 2027) to an RA reduces your taxable income dollar-for-dollar.

💰 Saves your marginal tax rate (18-45%) on every rand contributed
2

Join or Upgrade Medical Aid

Each medical aid member qualifies for a R376/month tax credit. For a family of four, this saves R1,360/month directly off your tax bill.

💰 R376 per member per month, directly reduces PAYE
3

Structure Travel Allowance

Only 80% of a travel allowance is automatically taxable. Keep a detailed logbook to claim the full deduction based on actual business kilometers.

💰 20% of travel allowance automatically excluded from tax
4

Time Bonus Payments

If close to a tax bracket threshold, ask your employer to defer your bonus to the next tax year (after 1 March) to stay in a lower bracket.

💰 Up to 4% savings per bracket level avoided
5

Claim Allowable Deductions

Claim home office expenses, wear-and-tear on work equipment, professional body fees, and donations to registered PBOs (Section 18A).

💰 Varies by deduction, but can save thousands annually
6

File Your Tax Return

Even if PAYE is deducted correctly, you may be owed a refund for medical expenses, travel claims, or overpayment from multiple income sources.

💰 Average refund ranges from R500 to R15,000+

Common salary levels after tax (2027 tax year)

The table below shows accurate take-home pay calculations for common salary levels in South Africa. These figures assume no medical aid, no retirement annuity contributions, and no travel allowance.

Monthly Gross Annual Gross PAYE/month UIF/month Take-Home/month Effective Rate
R8,250R99,000R0R83R8,1670%
R10,000R120,000R315R100R9,5853.2%
R15,000R180,000R1,215R150R13,6358.1%
R20,000R240,000R2,115R177R17,70810.6%
R25,000R300,000R3,381R177R21,44213.5%
R30,000R360,000R5,182R177R24,64117.3%
R40,000R480,000R4,695R177R35,12811.7%
R50,000R600,000R7,276R177R42,54714.6%
R65,000R780,000R11,718R177R53,10518.0%
R85,000R1,020,000R18,494R177R66,32921.8%
R100,000R1,200,000R23,653R177R76,17023.7%

Glossary: Salary tax terms explained

PAYE
Pay As You Earn. The monthly tax your employer deducts from your salary and pays to SARS on your behalf.
CTC (Cost to Company)
Your total gross salary package before any deductions, including employer contributions to medical aid or pension.
Marginal Tax Rate
The rate of tax applied to the next rand of income. Your bonus or raise is taxed at this rate.
UIF Ceiling
The maximum monthly earnings (R17,712) on which UIF contributions are calculated. Earnings above this do not attract additional UIF.
Section 11F
The section of the Income Tax Act allowing tax deductions for retirement fund contributions, capped at R430,000 for 2027.
IRP5
The tax certificate your employer issues at year-end detailing your income and all deductions made.

Frequently asked questions

How is PAYE calculated in South Africa?

PAYE is calculated by applying the SARS tax brackets to your annual taxable income, then subtracting your primary rebate of R17,820 and any medical aid credits. The result is your annual PAYE, divided by 12 for monthly deductions.

What is the tax-free threshold in South Africa 2026?

For the SARS 2027 tax year, the tax-free threshold is R99,000 per year for taxpayers under 65. For ages 65-74, it's R153,250 per year, and for ages 75+, it's R171,300 per year.

How much UIF do I pay on my salary?

You pay 1% of your salary towards UIF, but only on earnings up to R17,712 per month. The maximum annual UIF contribution is R2,125.44. If you earn more than R212,544 per year, you pay the maximum regardless of your actual salary.

Can I reduce my PAYE legally?

Yes. Contributing to a retirement annuity (up to 27.5% of income, max R430,000/year) reduces your taxable income. Joining a medical aid gives you R376/month tax credit per member. Both strategies legally reduce your PAYE.

Disclaimer: This calculator provides estimates based on SARS 2027 tax year rates (1 March 2026 – 28 February 2027). Actual tax liability may vary based on individual circumstances. For personalised tax advice, consult a registered tax practitioner. CalcMyPay is not affiliated with SARS.