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BY Jenny Klein AND Megan Stuart-Steer
2026 South African Budget Speech: Key updates for Private Clients
Personal Income Tax Relief
The 2026 Budget provides welcome inflationary relief to individual taxpayers for the first time since 2023/24. 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.
Key changes include an increase in the primary rebate from ZAR17,235 to ZAR17,820 and an increase in the tax-free threshold for taxpayers under 65 from ZAR95,750 to ZAR99,000. Medical tax credits rise from ZAR364 to ZAR376 for the first two members.
Threshold Increases Relevant to Private Clients
The Budget proposes significant increases to various thresholds affecting savings, investments, donations and capital gains:
Single Discretionary Allowance: Increase to ZAR2 Million
Big news 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. Expect regular reviews of these limits going forward.
Spousal Donation Exemption: Limitation to Resident Spouses
In a significant anti-avoidance measure, the Budget proposes to limit the donations tax exemption for transfers between spouses to donations made to a spouse who is a South African tax resident. This amendment will be effective from today, 25 February 2026.
This measure targets arrangements where high-net-worth individuals stagger the cessation of tax residence between spouses to avoid both donations tax and exit taxes under section 9H of the Income Tax Act. Under current law, a taxpayer could donate assets to a non-resident spouse tax-free, with the non-resident spouse then holding those assets outside the South African tax net.
Jenny Klein
Principal Associate | Tax
Megan Stuart-Steer
Executive | Tax
