Finance minister Enoch Godongwana has outlined the new tax brackets for personal income taxpayers in his Budget speech 2022 on Wednesday (23 February).
“The personal income tax brackets and rebates will be adjusted by 4.5%, in line with inflation,” Godongwana said.
“The adjustments will mean that the annual tax-free threshold for a person under the age of 65, will increase from R87,300 to R91,250.”
The minister added that medical tax credits will increase from R332 to R347 per month for the first two members, and from R224 to R234 per month for additional members.
The below table shows the personal income tax rates from 1 March 2022 to 28 February 2023 for individuals and trusts in South Africa:
Godongwana said that collections since the time of the Medium Term Budget Policy Statement (MTBPS) have been much stronger than expected. The National Treasury now estimates tax revenue for 2021/22 to be R1.55 trillion, he said.
“This is R62 billion higher than our estimates from four months ago, and R182 billion higher than our estimates from last year’s Budget. This follows a shortfall of R176 billion for 2020/21 when compared to the 2020 Budget
forecasts. This positive surprise has come mainly from the mining sector due to higher commodity prices.”
However, Godongwana warned that the improved revenue performance is not a reflection of an improvement in the capacity of the economy.
“As such, we cannot plan permanent expenditure on the basis of short-term increases in commodity prices,” he said.
“To be clear, any permanent increases in spending should be financed in a way that it does not worsen the fiscal deficit. We have also seen higher revenue from other sectors and other tax instruments, such as personal income tax and value-added tax.”