MARCH 2025 – SOUTH AFRICA
2025/2026 BUDGET SPEECH
It is important that employers note the following:
2025/2026 Budget Speech and tax proposals
The Minister of Finance, Enoch Godongwana, delivered the Budget Speech for the fiscal year 2025/2026 on Wednesday, 12 March 2025.
Highlights of the Budget Speech:
- Economic growth is expected to rise to 1.9% in 2025.
- The slower-than-anticipated growth in 2024 is attributed to unexpected challenges in the agriculture and transport sectors during the third quarter.
- From 2025 to 2027, growth is predicted to average 1.8%, driven by factors such as stronger investor confidence, reliable electricity supply, lower interest rates and reduced risk levels.
- The consolidated budget deficit is expected to narrow from 5% of GDP in 2024/25 to 3.5% of GDP in 2027/28.
- Total loan debt is expected to level off at 76.2% of GDP in the 2025/26 financial year.
- Debt repayment costs will increase from R389.6 billion in 2024/25 to R478.6 billion by 2027/28. However, when measured as a percentage of revenue, these costs will remain steady at 21.7% in 2024/25.
- To ease the burden on low-income households, the budget includes social grant increases exceeding inflation, an expanded list of VAT-exempt food items and an extension of fuel levy relief.
- The Road Accident Fund (RAF) levy and the customs and excise levy will also remain unchanged.
- The total borrowing requirement, which includes the budget deficit, maturing debt and Eskom debt relief, has been revised down from an estimated R457.7 billion to R415.7 billion for 2024/25, representing a decline from 6.1% to 5.6% of GDP. Tax proposals
- Tax policy proposals aim to generate R28 billion in additional revenue for 2025/26 and R14.5 billion for 2026/27.
- The government plans to increase the VAT rate by 0.5% in both 2025/26 and 2026/27.
- To support lower-income households, the government proposes adding more essential food items to the VAT-exempt list and keeping the fuel levy unchanged.
- Personal income tax brackets and rebates will not be adjusted for inflation in 2025/26.
For ease of reference, the most important information relating to taxes for employers are illustrated below:
Personal income tax brackets, rebates and thresholds remain the same.
Trusts other than special trusts: Tax rate of 45%
Medical tax credits (unchanged)
Subsistence allowances, travelling allowance and the SARS rate per kilometer
CRS published a news flash about this on 27 February 2025. Since then, the official government gazettes have been released and can be accessed by following this link.
To view the official Budget Speech, follow the link.
You can also download the latest tax guide by going here.
