Income tax: This is what you’ll pay

No rate hikes, but no inflationary adjustment for top four income brackets.

National Treasury will raise almost R7 billion from the personal income tax system through lower-than-inflation increases to tax rebates and brackets, effectively collecting taxes by stealth.

However, it has acknowledged that further hikes in personal income tax rates could be counterproductive and has kept rates unchanged.

Against the background of the introduction of a VAT hike of one percentage point to 15% on April 1, many taxpayers will see their disposable income come under pressure in the coming tax year.

The bottom three personal income tax brackets (for lower- and middle-income earners) and the primary, secondary and tertiary rebates will be partially adjusted for inflation through a 3.1% increase, while the top four brackets will remain unchanged from March 1.

The table below sets out the changes.

Tax Tables















South Africa’s personal income tax burden has slowly but surely increased from 8.3% of GDP in 2010/11 to 9.8% in 2017/18. In an effort to stabilise public finances and to enhance the progressive nature of the income tax system, government introduced a super tax bracket of 45% for individuals earning more than R1.5 million per annum in 2017. This was after personal income tax rates were increased by one percentage point in most cases in 2016.

“An additional personal income tax rate increase in 2018/19 would have greater negative consequences for growth and investment than a VAT increase. Moreover, significant shortfalls from this tax in 2017/18 suggest that further increases might not yield the revenue required to stabilise the public finances,” Treasury said in its budget review.

According to an analysis by PwC, the effect of the changes to the personal income tax rates will have the following effect at the various taxable income levels for taxpayers under 65:

Taxable Income 2018/2019 Tax Due Change from 2017/2018 % Change


R100,000 R3,933 -R432 -9.9%
R200,000 R22,265 -R910 -3.9%
R500,000 R113,807 -R2,017 -1.7%
R1,000,000 R312,973 -R2,017 -0.6%
R1,500,000 R517,973 -R2,017 -0.4%
R2,000,000 R742,973 -R2,017 -0.3%

The table below highlights the relatively small tax base and the skewed nature of income distribution in South Africa.
















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