SARS Income Tax Calculator

Tax-Free Threshold Explained

Not everyone who earns an income in South Africa needs to pay tax. SARS sets a minimum annual income level called the tax-free threshold (also known as the tax threshold). If your total taxable income for the year falls below this amount, you owe zero income tax.

The threshold exists because of the primary rebate, a fixed credit that SARS subtracts from every individual's tax liability. For the 2026/2027 tax year, the primary rebate is R 17 820,00. When you work backwards from that rebate using the 18% starting tax rate, the amount of income that produces exactly R 17 820,00 in tax is R 99 000,00. That is where the under-65 threshold comes from.

Older taxpayers get additional rebates on top of the primary one. Taxpayers aged 65 to 74 receive the secondary rebate of R 9 765,00, which lifts their threshold to R 153 250,00. Those 75 and older also receive the tertiary rebate of R 3 249,00, pushing their threshold to R 171 300,00.

Important: the threshold applies to your total annual taxable income, not your monthly salary. If you earn below the threshold for part of the year but above it overall, you still owe tax on the full amount above R0, less the rebates.

How PAYE Is Deducted Monthly

PAYE stands for Pay-As-You-Earn. It is the system your employer uses to deduct income tax from your salary every month and pay it over to SARS on your behalf. The goal is to spread your annual tax bill evenly across 12 months so that you are not hit with one large payment at the end of the year.

Your employer calculates PAYE by taking your monthly salary, multiplying it by 12 to get an estimated annual income, applying the progressive tax brackets to work out the annual tax, subtracting your rebates and any medical tax credits, and then dividing the result by 12. That monthly figure is what gets withheld from your payslip.

If your income is steady throughout the year, the total PAYE deducted over 12 months should closely match your actual annual tax liability. However, bonuses, overtime, commission, and salary increases during the year can cause mismatches. That is why your year-end tax return (or IRP5 reconciliation) exists: it compares what was deducted via PAYE against what you actually owe based on your full annual income.

Employers must pay PAYE over to SARS by the 7th of the month following the deduction (for example, January PAYE is due by 7 February). As an employee, you do not need to do anything during the year. Your employer handles the payments, and SARS receives an IRP5 certificate at year-end showing exactly what was earned and deducted.

If too much PAYE was deducted (for example, because you had additional deductions like retirement contributions that were not fully accounted for), you will get a refund after filing your return. If too little was deducted, you will owe SARS the difference.

Provisional Tax vs PAYE

PAYE and provisional tax are two different ways of paying income tax during the year. They serve the same purpose (preventing a large year-end bill) but apply to different types of income.

Many South Africans fall into both categories. If you have a salaried job (PAYE) and also earn rental income or freelance on the side, you are a provisional taxpayer for that additional income. Your employer handles PAYE on your salary, but you are responsible for estimating and paying provisional tax on everything else.

Getting your provisional tax estimate wrong can result in penalties. If you underestimate your taxable income by more than the allowed margin, SARS may charge an underestimation penalty. It is better to slightly overestimate and receive a refund than to underestimate and face additional charges.

You can use the calculator above to estimate your total annual tax liability across all income sources, which makes filling in your provisional tax return (IRP6) much easier.

Section 10(1)(o)(ii): Foreign Income Exemption

South Africa taxes residents on their worldwide income. However, if you work abroad for an extended period, you may qualify for a partial exemption under section 10(1)(o)(ii) of the Income Tax Act. This is commonly known as the foreign employment income exemption.

To qualify, you must meet all of the following requirements:

• You must be a South African tax resident.
• The income must be from employment services rendered outside South Africa.
• You must spend more than 183 days outside South Africa in any 12-month period starting or ending during the tax year.
• Of those 183+ days, at least 60 must be consecutive.

If you meet these conditions, the first R1.25 million of your foreign employment income is exempt from South African tax. Any amount above R1.25 million is taxable in South Africa, although you may claim a credit for tax already paid in the foreign country under a double taxation agreement (DTA).

This exemption does not apply to freelancers, business owners, or passive income like dividends and rental income. It only covers employment income (salary, bonuses, and allowances) from services physically performed outside South Africa. For the full legislation, see the SARS personal income tax guide.

What Is Taxable in South Africa

South Africa operates on a residence-based tax system. If you are a South African tax resident, you are taxed on your worldwide income from all sources. Here are some of the most common income types that people overlook.

Rental income

If you rent out a property (or even a room on platforms like Airbnb), the rental income is taxable. You can deduct expenses directly related to earning that income, such as bond interest (not the capital portion), rates and levies, insurance, repairs, and agent fees. The net profit after deductions is added to your other income and taxed at your marginal rate. You must declare rental income even if it results in a loss, as the loss can reduce your taxable income from other sources.

Side hustles and freelance income

Any income you earn from freelance work, consulting, tutoring, driving for ride-hailing services, or selling goods online is taxable. This includes cash payments, bank transfers, and payments in kind. If you earn regularly from a side hustle, SARS considers you to be carrying on a trade, which means you should register as a provisional taxpayer and make estimated payments twice a year. You can deduct business expenses like data costs, equipment, and travel directly related to earning that income.

Cryptocurrency

SARS treats cryptocurrency as an intangible asset, not as currency. If you trade crypto frequently (buying and selling for profit), SARS views this as revenue, and your profits are taxed as income at your marginal tax rate. If you hold crypto as a long-term investment and sell it occasionally, the profit may be treated as a capital gain, in which case only 40% of the gain is included in your taxable income (for individuals). The classification depends on your intention, frequency of trading, and the period of holding. SARS has published a crypto asset guide that outlines how they distinguish between revenue and capital treatment.

Interest and investment income

Interest earned from savings accounts, fixed deposits, and money market funds is taxable, but there is an annual exemption. For the 2026/2027 tax year, taxpayers under 65 can earn up to R23,800 in interest tax-free, while those 65 and older can earn up to R34,500. Interest above these thresholds is added to your taxable income. South African dividends from local companies are generally taxed at 20% dividends withholding tax, which is deducted at source, and are not included in your income tax return.

Capital gains

When you sell an asset (property, shares, crypto held as an investment) for more than you paid, the profit is a capital gain. Individuals receive an annual exclusion of R40,000 on capital gains. After the exclusion, 40% of the remaining gain is added to your taxable income and taxed at your marginal rate. For example, if you sell a second property at a R500,000 profit, R460,000 is included after the exclusion, and R184,000 (40% of R460,000) is added to your taxable income for the year.

When You Don't Need to Submit a Tax Return

Not every South African taxpayer needs to file an annual return. SARS runs an auto-assessment process where they use data from your employer (IRP5), banks (interest certificates), and medical aids to calculate your tax automatically. If the auto-assessment shows that you do not owe anything extra and are not due a refund, you may not need to file.

You generally do not need to submit a return if all of the following apply:

• Your total employment income for the year is below R500,000.
• You only have one employer for the full tax year.
• You have no other income (no rental income, freelance work, or business profits).
• You have no additional deductions to claim (such as retirement annuity contributions not reported on your IRP5, travel allowance claims, or home office deductions).
• You have no capital gains from selling assets.

If SARS auto-assesses you and the result is correct, you can simply accept it on eFiling or the SARS MobiApp. However, if you know the auto-assessment is wrong (for example, it missed a deduction), you should file a return to correct it.

When you must file: you must submit a return if you are a provisional taxpayer, if your income exceeds R500,000, if you have more than one employer, if you earn any non-salary income (rental, freelance, business), or if you want to claim deductions that were not captured in your IRP5. When in doubt, file. There is no penalty for submitting a return you did not strictly need to.

Tax Brackets, Rebates & Credits (2026/2027)