South Africa · SARS 2027 tax year (1 March 2026 – 28 February 2027) · PAYE, UIF, medical aid, retirement annuity
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Pay As You Earn — your employer deducts tax monthly based on SARS tables. The amount depends on your taxable income after rebates and credits.
The Unemployment Insurance Fund — you contribute 1% of salary, capped at R17,712/year. Pays out if you lose your job or go on maternity leave.
SARS gives a direct tax credit: R376/month for yourself and first dependent, R254 per additional — subtracted straight from your PAYE.
South Africa uses a progressive tax system. Your income is taxed at different rates for different portions — starting at 18% for the first R245,100 and rising to 45% for income above R1,878,600. You never pay the top rate on your entire salary.
Once your gross tax is calculated, SARS subtracts your primary rebate of R17,820 directly from the tax bill — not from your income. If you are 65 or older, additional secondary and tertiary rebates apply, further reducing your PAYE.
If you are on a registered medical aid, SARS gives you a tax credit of R376/month for yourself and each adult dependent, and R254/month for each additional dependent. This is subtracted directly from your PAYE — not your income.
After PAYE, your employer deducts UIF at 1% of your gross salary (capped at R17,712/year). If you have a retirement annuity or pension contribution, that is also deducted — reducing your taxable income and saving you tax.
PAYE is calculated by applying the SARS tax brackets to your annual taxable income, then subtracting your primary rebate (R17,820 for the 2027 tax year). The result is your annual PAYE, which is divided by 12 and deducted monthly by your employer.
Your gross salary is the total amount before any deductions. Your net salary (take-home pay) is what you receive after PAYE, UIF, pension contributions and other deductions have been subtracted. The gap between gross and net can be 15%–40% depending on your income level and deductions.
Not if you have deductions. Retirement annuity contributions, travel allowances (80% taxable) and employer pension contributions all reduce your taxable income before tax is calculated. Medical aid credits reduce your actual PAYE bill after calculation.
For the SARS 2027 tax year (1 March 2026 – 28 February 2027), the tax-free threshold is R99,000/year (approximately R8,250/month) for taxpayers under 65. If you earn below this amount, you pay no income tax. The threshold is R153,250 for those aged 65–74, and R171,300 for those aged 75 and over.
The most effective legal methods are: contributing to a retirement annuity (reduces taxable income by up to 27.5%), joining a medical aid (tax credit of R376/month), ensuring travel allowance deductions are applied correctly, and filing a tax return annually on SARS eFiling to claim any refunds owed.
Read our plain-English guides on South African tax and salaries.