On Wednesday, 25 February, the Finance Minister, Enoch Godongwana, delivered the 2026 Budget Speech, which contained positive news and some tax relief for taxpayers. The Minister acknowledged that the national savings and investment rate is far below the levels needed to create generational wealth and encouraged South Africans to save more, with the following adjustments taking effect from 1 March 2026.

Contributions to Approved Retirement Funds (Employer Funds and RAs)

The Taxation Laws Amendment Act (TLAA) of 2015, effective 1 March 2016, allows individuals to deduct up to 27.5% of taxable income (or remuneration, whichever is higher) for contributions to a pension, provident, or retirement annuity fund, subject to a maximum annual cap of R350,000.

This annual maximum tax-deductible limit for retirement fund contributions has been raised from R350 000 to R430 000.

This will allow individuals to invest more in retirement savings products on a tax-free basis.

Tax Free Savings Account

The Minister has increased the annual contribution limit for tax-free investments in South Africa for the first time since 2021. The annual contribution limit for tax-free investment products will increase from R36 000 to R46 000. There was no mention, at this stage, of the lifetime limit increasing beyond R500 000.

Single Discretionary Allowance

In other positive news for local investors looking to diversify offshore, the single discretionary allowance for individuals has been increased from R1 million per calendar year to R2 million per calendar year.

Capital Gains Tax

The annual exclusion for a capital gain or loss granted to individuals and special trusts will be increased from R40 000 to R50 000, and the exclusion granted to individuals in the year of death increases from R300 000 to R440 000. The primary residence exclusion will increase from R2 million to R3 million.

Donations Tax

The annual donations tax exemption will increase from R100 000 to R150 000 annually.

Individual Taxpayers (Personal Income Tax Brackets)

It is the first time in three years that individual taxpayers have been provided with relief from bracket creep, which is the effect of inflation on their salaries, which pushes them into a higher tax bracket.

Threshold on Annuitisation

The de minimus commutation limit has increased from R247 500 to R360 000. This limit is applied per retirement fund and not across all funds. The value is aggregated across retirement annuities. When a member retires, and the total retirement fund interest is below R360 000, they will not be required to purchase an annuity and can commute 100% of the lump sum below R360 000.

Living Annuity Annuitisation

The de minimus prescribed limit will increase from R125 000 to R150 000. This means that when the capital value remaining in a living annuity drops below R150 000 (de minimus), the value can be commuted and paid as a lump sum. The limit is normally applied on a per-insurer or per-fund basis, depending on whether the living annuity is provided by the fund or purchased from an insurer.

Medical Aid Tax Credits

Medical scheme tax credits have been increased from R364 to R376 per month for the first two beneficiaries, and from R246 to R254 for each additional dependant. This is the first adjustment in three years.

While the increase is modest, it provides relief to taxpayers facing sustained medical inflation. With the National Health Insurance Act subject to legal challenges and a prolonged implementation timeline, the preservation and enhancement of the tax credit underscores that the current dual healthcare framework is likely to remain in place for the foreseeable future.