This year’s Budget Speech, delivered by the Minister of Finance on 25 February 2026, held many positive developments, which were good news for businesses and taxpayers of South Africa. The key change was that the government withdrew the R20 billion tax increase under consideration and provided some much-needed relief to various taxpayers.

However, it should be noted that the budget remains a proposal and must still be formally debated and voted on in Parliament.

In a nutshell, personal income tax brackets and medical tax credits will be adjusted for inflation for the first time in three years, there are no major tax hikes, and great support for small businesses.

SOME OF THE HIGHLIGHTED CHANGES ARE…

  • The R20 billion tax increase has been withdrawn.
  • The annual tax-free savings investment incentive has been increased from R36 000 to R46 000.
  • Personal income tax brackets and medical tax credits will be fully adjusted for inflation.
  • The retirement fund deduction limit increases from R350,000 to R430,000.
  • The primary residence exclusion for CGT increases from R2 million to R3 million.
  • Tax thresholds and limits are also adjusted for inflation to assist small businesses and encourage savings.
  • Fuel levy increase of 9c/l for petrol and 8c/l for diesel.
  • Road Accident Fund levy increases by 7c/l to R2.25/l from 1 April.
  • The carbon fuel levy will increase to 19c/l for petrol and 23c/l for diesel from 1 April
  • VAT: No change to the rate, however, greater support for small businesses with the registration threshold updated for the first time since 2009, from R1 million to R2.3 million.
  • Corporate tax: No change
  • Sugar tax: No change.
  • Sin tax: Alcohol and tobacco increase by 3.4%

Some encouraging news is that South Africa obtained its first credit rating upgrade in 16 years and was removed from the FATF grey list. Revenue collections for 2025/26 have been revised upwards by R21.3 billion due to stronger VAT, corporate income tax and dividends tax collections.

The withdrawal of the R20 billion tax increase proposal, combined with inflation adjustments to personal income tax thresholds, means the overall tax burden for individuals and small enterprises will not increase materially. However, taxpayers should be aware that SARS continues to intensify compliance and enforcement activities, particularly in the areas of transfer pricing, trusts, cryptocurrencies, cross-border transactions and illicit trade.

Action Tips to Consider

  • Review your tax planning strategy early in the year — don’t wait until filing season.
  • Accurate bookkeeping and timely submissions are no longer optional, but critical.
  • Make sure your business is registered under the most beneficial tax structure, so it does not miss out on tax relief.
  • Review your payroll compliance to avoid any mistakes, as this is one of the most common audit triggers.
  • Plan your cash flow around provisional payments, so you will not be caught off guard and under budgeted.
  • Taxpayers with offshore crypto holdings must ensure these are properly disclosed.

If you need assistance reviewing your tax position, preparing financial statements, or ensuring full compliance with SARS requirements, Dirmeik Consulting is ready to support you — professionally, practically and proactively. You can find our latest Tax Guide here.

Let’s make this financial year one of clarity, compliance and growth.