Dear client

2025/2026 BUDGET SPEECH HIGHLIGHTS


On 12 March 2025 the Minister of Finance, Mr. Enoch Godongwana, presented the 2025/2026 Budget Speech. We provide a short summary below of the 2025/2026 tax proposals:

VAT rate

  • The VAT rate increases to 15.5% from 1 May 2025
  • The VAT rate further increases to 16% from 1 April 2026
  • VAT zero-rating introduced on specific edible offal, specific meat cuts, unflavoured dairy liquid blends and specific canned vegetables to assist poor households

Income tax: Individuals and special trusts

  • Tax brackets remain unchanged at 2024/2025 levels
  • Therefore, tax rates from 1 March 2025 to 28 February 2026 are:
    • 18% of taxable income: R1 – R237 100
    • R42 678 + 26% of taxable income above R237 100: R237 101 – R370 500
    • R77 362 + 31% of taxable income above R370 500: R370 501 – R512 800
    • R121 475 + 36% of taxable income above R512 800: R512 801 – R673 000
    • R179 147 + 39% of taxable income above R673 000: R673 001 – R857 900
    • R251 258 + 41% of taxable income above R857 900: R857 901 – R1 817 000
    • R644 489 + 45% of taxable income above R1 817 000: R1 817 001 and above

Tax rebates

  • Tax rebates remain unchanged at 2024/2025 levels, namely:
    • Primary (age below 65 years of age) – R17 235
    • Secondary (65 to 74 years of age) – R9 444
    • Tertiary (75 years and older) – R3 145

Tax thresholds

  • Tax thresholds remain unchanged at 2024/2025 levels, namely:
    • Age below 65 years of age – R95 750
    • 65 to 74 years of age – R148 217
    • 75 years and older – R165 689

Interest exemptions

  • Interest exemption for persons under 65 years of age is unchanged at R23 800.
  • Interest exemption for persons 65 years and older is unchanged at R34 500.

Dividend tax

  • Dividend withholding tax rate is unchanged at 20%.

Medical tax credits

  • Medical tax credits remain unchanged at 2024/2025 levels, namely:
    • R364 for each of the first two persons covered by a medical scheme, and
    • R246 for all subsequent dependants

Income tax: Companies

  • With years of assessment ending on any date between 1 April 2025 and 31 March 2026:
    • 27% of taxable income (rate unchanged)

Income tax: Small business corporations

  • Tax brackets remain unchanged at 2024/2025 levels
  • Therefore, with years of assessment ending on any date between 1 April 2025 and 31 March 2026:
    • 0% of taxable income: R0 – R95 750
    • 7% of taxable income above R95 750: R95 751 – R365 000
    • R18 848 + 21% of taxable income above R365 000: R365 001 – R550 000
    • R57 698 + 27% of the amount above R550 000: R550 001 and above

Turnover tax for micro business

  • Tax brackets remain unchanged at 2024/2025 levels
  • Financial years ending on any date between 1 March 2025 and 28 February 2026:
    • 0% of taxable turnover: R0 – R335 000
    • 1% of taxable turnover above R335 000: R335 001 – R500 000
    • R1 650 + 2% of taxable turnover above R500 000: R500 001 – R750 000
    • R6 650 + 3% of taxable turnover above R750 000: R750 001 and above

Retirement Fund Lump Sum Withdrawal Benefits

  • These benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on withdrawal (including assignment in terms of a divorce order).
  • Rates remain unchanged as follows:
    • R1 – R27 500 taxable income: 0% of taxable income
    • R27 501 – R726 000 taxable income: 18% of taxable income above R27 500
    • R726 001 – R1 089 000 taxable income: R125 730 + 27% of taxable income above R726 000
    • R1 089 001 and above taxable income: R223 740 + 36% of taxable income above R1 089 000

Retirement Fund Lump Sum Benefits or Severance Benefits

  • Retirement fund lump sum benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on death, retirement, or termination of employment due to reaching the age of 55, sickness, accident, injury, incapacity, redundancy or termination of the employer’s trade.
  • Severance benefits consist of lump sums from or by arrangement with an employer due to relinquishment, termination, loss, repudiation, cancellation or variation of a person’s office or employment.
  • Rates remain unchanged as follows:
    • R1 – R550 000 taxable income: 0% of taxable income
    • R550 001 – R770 000 taxable income: 18% of taxable income above R550 000
    • R770 001 – R1 155 000 taxable income: R39 600 + 27% of taxable income above R770 000
    • R1 155 001 and above taxable income: R143 550 + 36% of taxable income above R1 155 000

Donation tax

  • Unchanged as follows:
    • Exempt up to R100 000 p.a. for natural persons.
    • Donations tax payable by donor at 20% on the cumulative value of donations up to R30 million per tax year.
    • Donations tax payable by donor at 25% on the cumulative value of donations exceeding R30 million per tax year.

Estate duty

  • Unchanged as follows:
    • Tax rate:
      20% on the dutiable value of the first R30 million, and
      25% on the dutiable value above R30 million
    • Basic deduction: R3,5 million
    • Inheritances to a spouse remains exempt from estate duty

Trusts

  • Unchanged as follows:
    • Income tax rate: 45%

General fuel levy & road accident levy

  • Remain unchanged at 2024/2025 levels

Excise duties

  • Alcohol duties - increase of 6.75%
  • Tobacco duties - increase between 4.75% and 6.75%

Transfer duty

  • Transfer duty is adjusted for the effect of inflation, in the following manner:
    • R1 – R1 210 000: 0% of the value.
    • R1 210 001 – R1 663 800: 3% of the value above R1 210 00
    • R1 663 801 – R2 329 300: R13 614 + 6% of the value above R 1 663 800
    • R2 329 301 – R2 994 800: R53 544 + 8% of the value above R 2 329 300
    • R2 994 801 – R13 310 000: R106 784 +11% of the value above R2 994 800
    • R13 310 001 and above: R1 241 456 + 13% of the value exceeding R13 310 000

Capital gains tax

  • Unchanged for individuals:
    • Capital gains tax inclusion rate: 40%
    • Annual exclusion: R40 000
    • Exclusion on death: R300 000
    • Primary residence: R2 000 000
    • Small business exclusion (market value up to R10 million): R1 800 000
  • Capital gains tax inclusion rates for companies and trusts remains unchanged at 80%

Carbon tax

  • Rate increased from R190 to R236 per tonne of CO2 equivalent effective from 1 January 2025.
  • The carbon fuel levy will increase by 3c/litre to 14c/litre for petrol and 17c/litre for diesel from 2 April 2025.

If you have any questions, please do not hesitate to contact us.

Please view our DIGITAL TAX GUIDE and save it for your convenience.

Kind regards,

FHBC Personnel



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