South Africa’s 2026 Budget Speech introduced a series of tax adjustments aimed at maintaining revenue stability while offering targeted relief to households and businesses. While the overall tax framework remains largely unchanged, several thresholds and allowances have been updated, mostly in line with inflation.
One of the most notable announcements is that the VAT standard rate will remain at 15%, avoiding additional pressure on household consumption. However, the VAT registration thresholds will change significantly from 1 April 2026. The compulsory registration threshold will increase from R1 million to R2.3 million, while the voluntary registration threshold will rise from R50,000 to R120,000. These changes are expected to reduce the administrative burden on smaller businesses while still capturing larger firms within the VAT net.
On the personal tax side, personal income tax brackets and rebates will be adjusted in line with inflation, providing modest relief to taxpayers by preventing “bracket creep.” Medical tax credits will also see a small increase, rising from R364 to R376 per month for the first two members, and from R246 to R254 for additional dependants.
The budget also confirmed several excise duty adjustments. Duties on alcohol and tobacco will increase in line with inflation. Fuel-related levies will also rise from 1 April 2026 - the general fuel levy increases by 9 cents per litre on petrol and 8 cents per litre on diesel, while the Road Accident Fund levy increases by 7 cents per litre.
Several important tax thresholds and investment limits have been expanded. The annual deduction limit for retirement fund contributions increases to R430,000, while the annual capital gains tax exclusion rises to R50,000. The exclusion for the disposal of a primary residence increases from R2 million to R3 million, and the annual tax-free savings contribution limit increases to R46,000.
Overall, the 2026 budget prioritises incremental adjustments rather than major tax reforms, balancing fiscal pressures with modest taxpayer relief. Should you require professional advice on the new tax changes, do not hesitate to contact our offices.