Budget Speech Highlights: Quick Tax Updates to Know About

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The Budget Speech always comes with a few tweaks that can affect your personal tax, payroll, and planning. Here are the key changes we want you to be aware of — nice and simple.

1) Medical Aid Tax Credits have increased

If you’re on a medical aid, the monthly tax credit has gone up slightly:

Medical aid tax credit

Current

Updated

Member and 1st dependant

R364

R374

Each additional dependant

R246

R254

2) Fixed travel rate has increased

The fixed travel reimbursement rate has increased from R4.76 per km to R4.95 per km. If your employer reimburses you above this rate, the amount above the rate is fully taxable (taxed under s 7B).

3) Retirement contributions: higher deduction cap (s11F)

Good news here — the maximum cap has increased. Retirement Fund Contributions deductions (s11F) are limited to the lesser of:

  • 27.5% of the greater of remuneration or taxable income, or

  • R430 000

This applies for years of assessment commencing from 1 March 2026 (previously R350 000).

4) Tax-free investments: higher annual allowance

The annual allowance for tax-free investments has increased from R36 000 to R46 000 from 1 March 2026. The lifetime limit stays the same at R500 000.

5) Interest exemption: no change

The interest exemption (s10(1)(i)) for interest earned in South Africa remains unchanged:

  • R23 800 if you’re under 65

  • R24 500 if you’re 65 or older

6) Capital gains annual exclusion has increased (individuals)

The annual capital gains exclusion for individuals has increased from R40 000 to R50 000 per year.

7) Primary residence capital gains exclusion has increased

The primary residence exclusion for Capital Gains has increased from R2 000 000 to R3 000 000.

8) Donations tax annual exemption has increased

The donations tax annual exemption per person has increased from R100 000 to R150 000.

9) Estate duty: unchanged

No changes here. Estate duty remains:

  • 20% for estates under R30 million

  • 25% for estates over R30 million

The abatement remains R3 500 000.

10) “Casual gifts” allowance for non-individual donors (from 1 March 2026)

From 1 March 2026 (the 2026/27 tax year), a non-individual donor can make “casual gifts” totaling up to R20 000 per tax year without paying Donations Tax.

11) Tax threshold and rebates have increased

The tax threshold has increased from R95 750 to R99 000 for individuals. Rebates have also increased from R17 235 to R17 820 for individuals under 65.

Need help applying this to your situation?

If you’d like us to review how any of these changes affect your tax position (or your payroll / travel reimbursements / retirement contributions), please get in touch — we’re happy to help.