South Africa | Annual Amendments 2026/2027
The Minister of Finance delivered the National Budget on 25 February 2026, announcing amendments under the Income Tax Act that affect payroll for the 2026/2027 tax year. These changes include adjustments to personal income tax brackets, rebates, medical scheme fees tax credits and the prescribed reimbursive travel allowance rate, effective from 1 March 2026.
Legislative summary of changes
Personal income tax brackets and rebates – Sections 5(2)(a) and 6(6)
- Personal income tax brackets and primary, secondary and tertiary rebates have been adjusted to compensate for inflation.
- In terms of section 5(2)(a) and 6(6), the Minister may amend normal tax rates and rebates by announcement in the annual National Budget. Revised amounts apply from the date determined by the Minister and remain valid for 12 months, subject to enabling legislation.
- Paragraph 9 of the Fourth Schedule requires the updated tax deduction tables and rebates to be applied for PAYE purposes.
Medical scheme fees tax credits – Section 6A(5)
- In terms of section 6A(5), the Minister may amend medical scheme fees tax credit amounts by Budget announcement. Revised amounts apply from the date determined by the Minister and remain valid for 12 months, subject to enabling legislation.
- For the 2026/2027 tax year, the credits are:
- R376 per month for the taxpayer, or for one dependant where the taxpayer is not a member.
- R752 per month for the taxpayer and one dependant, or for two dependants where the taxpayer is not a member.
- R254 per month for each additional dependant.
Reimbursive travel allowance – prescribed rate Income Tax Notice
- The prescribed rate per kilometre for reimbursive business travel has been published in an Income Tax Notice by the SARS Commissioner.
- For years of assessment commencing on or after 1 March 2026, the prescribed rate is R4.95 per kilometre.
- This rate must be used to determine PAYE treatment of reimbursive travel allowances (any value exceeding the prescribed rate is included in remuneration and subject to PAYE).
Free or cheap accommodation fringe benefit – Paragraph 9(3) of the Seventh Schedule
- The abatement value (B) in the accommodation fringe benefit formula has increased to R99 000 with effect from 1 March 2026.
- Although the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (which contains the revised value of B) has not yet been promulgated, the updated value aligns with the revised primary tax threshold announced during the Budget Speech and is reflected in the draft Bill.
In line with industry best practice, the amended B value of R99 000 is applied from the beginning of the 2026/2027 tax year.
Additional information and resources
- PAYE Calculator (Excel)
- Tax Calculator (Website)
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The Deel Local Payroll Team