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BY Robert Gad , Megan Stuart-Steer AND Lelethu Stuurman
2026 South African Budget Speech: Key updates for Share Plan Participants and Employers
Personal Income Tax Relief
For the first time since 2023/24, the 2026 Budget provides inflationary relief to individual taxpayers. Personal income tax brackets and rebates will be adjusted by 3.4 per cent from 1 March 2026, with lower- and middle-income earners deriving the most benefit.
The primary rebate increases from ZAR17,235 to ZAR17,820, while medical tax credits rise from ZAR364 to R376 for the first two members and from ZAR246 to ZAR254 for additional members. The tax-free threshold for taxpayers under 65 increases from ZAR95,750 to ZAR99,000.
Personal Income Tax Rates: 2026/27
Key Threshold increases relevant to Share Plans
The Budget proposes significant increases to various thresholds that have not been adjusted for many years. Of particular relevance to share plan participants and employers:
Single Discretionary Allowance: Increase to ZAR2 Million
Major change for individuals: the single discretionary allowance is doubling from ZAR1 million to ZAR2 million per calendar year. This applies to all purposes-travel, gifts, remittances, investments and donations-through Authorised Dealers. The increase reflects adjustments for inflation and currency fluctuations. Transfers via Authorised Dealers with limited authority also rise to ZAR2 million. Regular reviews of these limits can be expected going forward.
Withholding Tax Clarification: Non-Resident Employers with a Permanent Establishment
The 2023 amendments to the Fourth Schedule extended employees' tax-withholding obligations to non-resident employers conducting business through a permanent establishment (“PE”) in South Africa. Stakeholders raised concerns that this amendment could produce anomalous results where an employee has no connection to the PE, for example, where a non-resident employer with a South African PE employs a South African resident in their home country.
The Budget now proposes to amend the PE requirement for non-resident employers to include an additional requirement that the employee must be effectively connected to the PE in South Africa before a withholding obligation arises. This is a welcome clarification that should resolve the identified anomaly. This amendment will take effect from 1 March 2026 to assist potential applicants without affecting existing applications.
Robert Gad
Executive | Tax
Megan Stuart-Steer
Executive | Tax
Lelethu Stuurman
Candidate Legal Practitioner | Tax
