Understanding South African Taxation: A Practical Guide for Individuals
Tax can feel complicated, but once you break it down into key principles, South Africa’s taxation method becomes much easier to follow. Whether you’re just starting your career, freelancing, or already contributing to retirement funds, knowing when you’re required to file a tax return and what is included when calculating the tax amount that should be paid to SARS for that tax year, can save you both time and money.
SOUTH AFRICA GUIDE
Minimum Taxable Income and Filing Requirements
Not everyone in South Africa is required to file a tax return. The South African Revenue Service (SARS) sets thresholds each year, depending on age.
For the 2025 tax year (1 March 2024 – 28 February 2025), if your annual income is:
Below R95,750 and you are under 65, you do not pay tax.
Below R148,217 if you are 65 to 74, you do not pay tax.
Below R165,689 if you are 75 or older, you do not pay tax.
When You Must File a Tax Return
You are required to submit a tax return if:
Your income is above the thresholds listed above, or
You earned income from more than one source (e.g., salary plus side business), or
You earned rental income, foreign income, or capital gains, or
SARS requests it, even if you’re below the threshold.
When You May File, But Are Not Required To
If you earned only one salary below the threshold, with PAYE (Pay-As-You-Earn) tax already deducted correctly, you don’t have to file a return. However, you may still file voluntarily if:
You want to claim medical aid tax credits.
You contributed to retirement annuities or other deductible items.
You suspect you overpaid tax and are due a refund.
Gross Income and Exclusions
SARS defines gross income as all amounts, in cash or otherwise, received or accrued during the tax year — unless specifically excluded. This generally includes salaries, wages, business profits, investment income, and fringe benefits.
Common Gross Income Exclusions
Not everything you receive counts toward taxable income. Exclusions include:
Certain capital amounts (like inheritances or specific lump-sum insurance payouts).
Tax-free savings account proceeds.
Certain scholarships or bursaries (within limits).
Income Tax Deductions for Individuals
South African tax law allows certain deductions that lower your taxable income:
Retirement Contributions
Pension Fund (usually through your employer).
Provident Fund (similar to pension but with different withdrawal rules).
Retirement Annuity (RA) – the “third option” you can take out privately (e.g., with Liberty, Allan Gray, etc.).
✅ Deductible up to 27.5% of taxable income, capped at R350,000 annually.
Medical Aid Contributions
You get a medical tax credit for your monthly contributions (a fixed amount per member).
Additional credits may apply if you have dependents or large out-of-pocket medical expenses.
Donations to Approved Public Benefit Organisations (PBOs)
You can deduct up to 10% of taxable income for donations to registered charities.
From Gross Income to Taxable Income
Here’s the flow:
Start with Gross Income.
Subtract Exclusions (amounts SARS doesn’t tax).
Subtract Allowable Deductions (retirement, medical, donations, etc.).
The result is your Taxable Income.
Rebates
Once your tax liability is calculated, SARS applies rebates — these are automatic reductions based on age.
For 2025:
Primary rebate (all taxpayers): R17,235
Secondary rebate (65–74): R9,444
Tertiary rebate (75+): R3,145
Tax Tables (2025 Tax Year)
Taxable Income (R) Rates of Tax
0 – 237,100 18% of taxable income
237,101 – 370,500 R42,678 + 26% of amount above R237,100
370,501 – 512,800 R77,362 + 31% of amount above R370,500
512,801 – 673,000 R121,475 + 36% of amount above R512,800
673,001 – 857,900 R179,147 + 39% of amount above R673,000
857,901 – 1,817,000 R251,258 + 41% of amount above R857,900
1,817,001 and above R644,489 + 45% of amount above R1,817,000
Conclusion
Understanding how SARS taxes individuals is about following the steps:
Check if you meet the filing threshold.
Know what counts as income and what doesn’t.
Claim all legitimate deductions.
Apply rebates and check your final tax liability against the tables.
Even if you fall below the taxable threshold, it can still be worth filing a return to unlock refunds or credits. And for those contributing to retirement annuities or medical aid, filing ensures you maximise your tax benefits.
Check out the detailed explanation of the above terms and examples.
You can access the schematic representation of the above here.
You can skip to SARS eFiling here.