This means that taxpayers will fall prey to inflationary bracket creep.<\/p>\n\n\n\n
Any South Africans who received an inflation-based or higher salary hike in 2025 may now find themselves in a higher tax bracket and paying more taxes.<\/p>\n\n\n\n
This was one of the major trade-offs Godongwana had to implement to cover for a heavily reduced VAT hike in the country.<\/p>\n\n\n\n
The minister initially sought to hike VAT by two percentage points to 17% in 2025, but this was shot down by partners within the Government of National Unity.<\/p>\n\n\n\n
After careful consideration, the government has still opted to increase VAT, but now only by 0.5%pts in 2025, and further 0.5%pts in 2026.<\/p>\n\n\n\n
This will bring VAT to 16% in 2026.<\/p>\n\n\n\n
To make up for the ‘lost’ revenue from the move, the government is now proposes no inflationary adjustments to personal income tax brackets, rebates and medical tax credits.<\/p>\n\n\n\n
These measures will raise R28 billion in additional revenue in 2025\/26 and R14.5 billion in 2026\/27.<\/p>\n\n\n\n
The personal income tax proposals are effective from 1 March 2025 and are expected to raise revenue of R19.5 billion<\/strong>, alone.<\/p>\n\n\n\n “The additional revenue will be used to increase funding for key public services, including education, health and commuter rail,” the Treasury said.<\/p>\n\n\n\n “The impact of the tax measures on the most vulnerable households will be cushioned by real increases in social grants, an expansion of the list of zero-rated foods and continued fuel levy relief.”<\/p>\n\n\n\n Over the medium term, new spending pressures will need to be addressed through expenditure reductions, reprioritisations or additional revenue measures, Treasury said.<\/p>\n\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/03\/2024-tax-tables.png\")
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