After an unprecedented postponement triggered by widespread disagreements within the GNU (Government of National Unity) regarding a proposed VAT increase, Finance Minister Godongwana presented the 2025/2026 National Budget Speech on 12 March 2025.  Below is a summary of the tax-related changes: –

VAT (Value Added Tax)

Considering the impact of a VAT adjustment, VAT will be increased from 15% to 15.5% on 1 May 2025 and to 16% on 1 April 2026. More VAT zero-rated foods will be added to relieve poorer households, as will social grants be increased by more than the inflation rate. The fuel levy will also remain unchanged.

Transfer Duty

The Minister announced that the monetary thresholds for transfer duty will be adjusted upwards by 10% to counter inflation. As such, purchasing a property with an acquisition value of R1,210,000 or less will not attract the payment of transfer duty. This threshold adjustment, proposed to take effect on 1st April 2025, will reduce the associated cost of purchasing property and attract more prospective buyers.

Personal income tax and medical tax credits

For the second year running, personal income tax brackets, individual rebates, and medical tax rebates remain unchanged and will not be adjusted for inflation.

Other taxes

Offering some relief to stressed taxpayers, the Minister did not propose increases to capital gains tax, dividends tax, estate duty, corporate income tax, or donations tax. However, the monetary thresholds for tax-free investments and interest income exemptions remain unchanged.

The carbon tax on fuel will increase by 3 cents. This effectively raises the petrol carbon tax from 11 cents to 14 cents per liter and from 14 cents to 17 cents in the case of diesel.

Increase of 6.75% in excise duties on alcoholic beverages.

6.75% rise in excise duties on cigars and pipe tobacco and 4.75% on cigarettes and other tobacco products.

Tax Rebates for Natural persons remain unchanged, as follows:

  • Primary: R17 235
  • Secondary (Persons 65 and older): R9 444
  • Tertiary (Persons 75 and older): R3 145

Thresholds for Natural persons:

  • Below age 65: R95 750
  • Age 65 to below 75: R148 217
  • Age 75 and over: R165 689

For further information on how this budget affects you personally or your business, contact Dirmeik Consulting today.