How PAYE Works in South Africa

PAYE — Pay As You Earn — is the income tax your employer takes off your salary every month and pays to SARS on your behalf. You never see that money in your bank account, which is exactly why so many people are unsure how the number is worked out. The short version: you are not taxed a single flat percentage on your whole salary. South Africa uses a sliding scale, and understanding that one idea clears up most of the confusion.

Your income is sliced into bands, and each band is taxed at its own rate. For the 2026/27 tax year the first R245 100 you earn in a year is taxed at 18%. Only the portion above that — up to R383 100 — is taxed at the next rate, 26%. The portion above that is taxed at 31%, and so on up to 45% on income above R1 878 600. This is the single most important thing to understand about South African tax: moving into a higher bracket does not mean your whole salary is suddenly taxed at the higher rate. Only the rand inside that band are.

Here are the full 2026/27 brackets (annual taxable income):

Taxable income	Rate on the amount in this band
R0 – R245 100	18%
R245 101 – R383 100	26%
R383 101 – R530 200	31%
R530 201 – R695 800	36%
R695 801 – R887 000	39%
R887 001 – R1 878 600	41%
Above R1 878 600	45%

Once SARS works out the tax on your sliced-up income, it subtracts a rebate — a flat amount everyone gets that the tax tables already build in. For 2026/27 the primary rebate is R17 820 a year. This rebate is the reason you pay no income tax at all until you earn more than R99 000 a year (about R8 250 a month) — below that, the rebate cancels out the tax entirely.

A worked example. Say you earn R30 000 a month, which is R360 000 a year. The first R245 100 is taxed at 18% (that's R44 118). The remaining R114 900 falls in the 26% band (R29 874). Add those together and the tax is R73 992. Subtract the R17 820 rebate and you get R56 172 for the year — about R4 681 a month in PAYE. That is roughly 15.6% of your salary, even though your "top" bracket is 26%. The blend of bands and the rebate is why your effective rate is always lower than your bracket rate.

PAYE isn't the only thing that comes off your payslip — UIF and, depending on your medical aid and retirement contributions, several adjustments also apply. Those are covered in the other guides. But PAYE is usually the biggest single deduction, and now you know how it's built.

This is general information, not tax advice. To see your own numbers including age, medical aid and retirement, use the calculator.