South African Budget Speech 2026

Written By Guest User

Finance Minister Enoch Godongwana delivered a notably optimistic 2026 Budget in Cape Town, offering meaningful tax relief for individuals and support for small businesses — while still introducing higher fuel and sin taxes.

After two years of frozen tax brackets, which quietly eroded take-home pay through “bracket creep”, government has adjusted personal income tax brackets and medical tax credits in line with inflation (3.4%). The result: modest but welcome relief for households under pressure.

The Good News: Tax Relief and Higher Limits

For the first time in three years, income tax brackets and rebates have been increased in line with inflation. That means salary increases meant to keep up with rising prices will no longer automatically push taxpayers into higher brackets.

Personal Income Tax

  • Individuals earning R8,250 or less per month will not pay income tax.

  • Bracket creep has been eliminated for 2026.

  • Other thresholds and tax limits have also been inflation-adjusted.

Medical Scheme Tax Credits

  • Increased from R364 to R376 (first two members).

  • Increased from R246 to R254 (additional members).

  • A family of four will now receive:

    • R1,260 per month (up from R1,220).

    • R15,120 per year (up from R14,640).

Savings and Investment Incentives

  • Tax-Free Savings Account (TFSA) annual limit increased from R36,000 to R46,000.

  • Retirement fund contribution deduction cap increased from R350,000 to R430,000 (first increase in a decade).

  • Donations tax annual exemption increased from R100,000 to R150,000.

  • Capital Gains Tax (CGT) primary residence exclusion increased from R2 million to R3 million.

  • CGT exclusion on death increased from R300,000 to R440,000.

Travel and Offshore Allowances

  • Single discretionary allowance doubled from R1 million to R2 million per year.

  • Cash limit for SA banknotes when entering or leaving the country increased from R25,000 to R100,000.

Support for Small Business

Government withdrew a previously proposed R20 billion tax increase, easing pressure on the economy.

Additional measures include:

  • VAT registration threshold updated for the first time since 2009.

  • Tax thresholds adjusted to support small businesses.

  • Implementation of updated global minimum tax rules in 2026/27 to reduce multinational profit shifting.

  • Continued rollout of the Targeted and Responsible Savings (TARS) initiative, identifying R12 billion in savings and reallocations.

The Fiscal Picture

While offering tax relief, government remains focused on stabilising public finances.

  • Budget deficit: 4% of GDP in 2026, narrowing to 3.1% by 2028/29.

  • Debt-to-GDP ratio: Falling to 77.3% in 2026/27 (from 79.8%).

  • Primary surplus: 0.9% of GDP.

  • GDP growth forecast: 1.6% in 2026.

  • Inflation forecast: 3.4%.

  • Household consumption growth: 1.8%.

  • Public sector wage increases average 4.4%.

  • Transnet secured a R16.1 billion allocation for infrastructure.

The Bad News: Fuel and Carbon Levies Rise

Motorists will feel the pinch from 1 April:

  • General fuel levy

    • Petrol: R4.10 per litre

    • Diesel: R3.93 per litre

  • Road Accident Fund (RAF) levy

    • Increased by 7c to R2.25 per litre

  • Carbon fuel levy

    • 19c/litre for petrol

    • 23c/litre for diesel

  • Carbon tax increases from R236 to R308 per tonne from January 2026.

After three years of frozen fuel levies, the increases were widely expected — but they will raise transport and logistics costs across the economy.

Sin Taxes: Tobacco, Vapes and Alcohol

As in every Budget, excise duties on alcohol and tobacco products have increased in line with inflation (3.4%), effective immediately.

Consumers can expect:

  • 246.61 cents tax on a 340ml can of cider

  • R23.58 tax on a pack of 20 cigarettes (77c increase)

  • R17.68 tax on heated tobacco sticks (58c increase)

  • R3.29 per ml on vaping products

    • R6.58 on a standard 2ml vape

    • R26.32 to R78.96 on larger disposables

From next year, sin tax increases will take effect from 1 April instead of immediately after the Budget speech.

Bottom Line

Budget 2026 delivers meaningful relief to individuals through inflation-adjusted tax brackets, higher savings incentives and increased medical credits. At the same time, government continues efforts to stabilise debt and support infrastructure investment.

However, fuel levy increases and higher excise duties will offset some of the gains for households.

Overall, this Budget represents a careful balancing act: modest tax relief, fiscal discipline, and selective revenue increases — without major new tax shocks for South Africans.

SOURCES: IOL, Daily Maverick, Business Day, MoneyWeb

Guest User
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