After two years without inflationary relief, Finance Minister Enoch Godongwana has announced adjustments to personal income tax brackets and rebates aimed at cushioning households from rising living costs.
Tabling the national Budget Speech in Cape Town on Wednesday, Godongwana told the National Assembly of South Africa that the measures are intended to ease financial pressure on individuals and businesses.
He said the country’s savings and investment rate remains well below levels needed to build long-term and intergenerational wealth, prompting government to introduce incentives to encourage greater saving.
“To encourage South Africans to save more, we propose that the tax-free annual investment limit be increased from R36,000 to R46,000 per year,” he said.
Over the Medium-Term Expenditure Framework (MTEF) period, National Treasury expects tax revenues to grow from R2.13 trillion in the 2026/27 financial year to R2.38 trillion in 2028/29, with the tax-to-GDP ratio projected to average 26.1%.
However, Godongwana cautioned that some tax increases remain unavoidable. Excise duties on tobacco products including electronic nicotine and non-nicotine delivery systems will rise in line with inflation, as will duties on alcoholic beverages.
Fuel levies will also increase, with the general fuel levy set to climb by nine cents per litre for petrol and eight cents per litre for diesel.
While the tax relief offers some breathing room for consumers, the broader package suggests a careful balancing act a little relief in one hand, a few extra cents at the pump in the other.