Budget Speech 2026 Highlights | A Fiscal Turning Point in a Resilient Economy
This year's Budget Speech saw welcome relief after tough recent budgets.
No major tax hikes or new taxes were introduced, with the government maintaining responsible finances while boosting some growth through infrastructure spending.
I attach our summary, as well as the SARS Budget 2026 Tax Guide, which includes the relevant tax tables and usual tax deduction limits, and can be useful in a year when doing your tax returns.
Key highlights include:
Bracket creep relief, the first in two years. Tax brackets, rebates and thresholds adjusted for inflation → ~R13.7 billion back in taxpayers' pockets.
Medical aid tax credits increased (e.g., from R364 to R376 per month for the first two members).
Tax-free savings account (TFSA) annual limit up to R46 000 (great for building wealth tax-free), although the lifetime allowance of R500 000 oddly remains.
Retirement contributions deduction remains at 27,5%m but the maximum limit is raised from R350 000 to R430 000 per year.
Single offshore allowance increased to R2 million per person per year – easier to invest abroad.
Primary residence exemption increased from R2 million to R3 million.
The annual CGT exclusion increased from R40 000 to R50 000, granted to individuals and special trusts.
The living annuity commutation limit is increased to R150 000; the donations tax exemption increased from R100 000 to R150 000.
Sin taxes (alcohol, tobacco) rise only with inflation; fuel levy increases below inflation (only 9c/ℓ petrol).
The proposed R20 billion extra taxes from last year were withdrawn, thanks to stronger revenue collections.
PWM Budget in a Nutshell | How it Affects You
We summarise the Budget as it affects individual taxpayers.
Income Tax Collections
Tax collections are now estimated to be;
Treasury’s projections for inflation and growth are broadly in line with most private sector forecasts and are therefore credible. It expects that the uplift to GDP growth will come from a swing in fixed investment spending from -2% in 2025 to +2,4% in 2026, rising to 3,9% by 2028.
Household consumption spending is set to moderate from the strong 3,2% growth in 2025 to around 2% over the medium term. Therefore, increases in fixed investment spending by both the public and private sectors are critical to the overall growth outlook.
This next bit is technical: While most of the focus tends to be on real GDP growth, it is nominal GDP growth - i.e. how much income the economy produces including inflation - that really matters for the Budget.
For instance, SARS collects taxes based on nominal income growth; it doesn’t adjust for inflation. Moreover, fiscal ratios are expressed as a percentage of nominal GDP. Since inflation declined by more than expected, nominal GDP growth was only 4% in the 2025 fiscal year and an estimated 4,8% in the 2026 fiscal year. This transition to a structurally lower inflation rate had a short-term negative impact on the Budget, for instance, by pushing up debt ratios.
However, it is now embedded in the Budget and should have a limited impact going forward. Nominal GDP growth is forecast to average between 5,2% and 5,6% over the medium term, largely reflecting faster real economic growth. The problem is that this is still well below the government’s current weighted borrowing cost of around 7% to 8%. We will only achieve long-term fiscal sustainability when borrowing costs are in line with nominal GDP growth.
Regarding commodity prices, there is some forecast risk. Treasury expects the gold price to average between $4 500 and $4 700 per ounce over the next three years. This is below current spot prices, but the speculative element in the gold market makes it difficult to know whether these prices will be achieved. Platinum is forecast to remain above $2 000 per ounce.
The oil price, currently elevated due to tensions in the Persian Gulf, is expected to hold around $60 per barrel over the medium term.
National Debt Ratio
This ratio has now been revised lower again, thanks to some improvements in the higher taxes collected.
Gross debt stabilises as a share of GDP in 2025/26, at 78,9 per cent. In 2026/27, it falls further, to 77,3 per cent of GDP and declines to 76,5 per cent by 2028/29.
The main budget primary surplus for 2025/26 reaches 0,9 per cent of GDP.
In the next financial year, it expands to 1,6 per cent, and then to 1,9 per cent in 2027/28. By 2028/29, Treasury see it reaching 2,3 per cent.
This places the expectations over time for the debt ratio graphically as;
The Nitty Gritty for Individual Taxpayers
After last week's mention that many would be looking at Bracket Creep in the budget, the Minister shifted the individual income tax brackets by inflationary adjustments, which was a welcome surprise after seeing no adjustments the last few years.
There were no new higher tax bands for wealthy individuals, nor any increase in VAT, Capital Gains Taxes, or Dividend Withholding Taxes.
In summary, you will pay around 3% to 3,5% less Income Tax next year on the same income, but you will pay more in sin taxes.
Izak Odendaal | Opportunities in South Africa’s Recovery Budget Speech 2026
Our Chief Investment Strategist, Izak Odendaal, discusses the 2026 Budget Speech, focusing on growth and debt stabilisation aimed at improving South Africa’s medium-term outlook.
To view, click on this link (less than 5 minutes).
We Have Come a Long Way, and reforms are taking place
Reforms are underway, even if not as quickly as we would all like.
We quickly forget, so just a reminder to those who read the Budget eight years ago……………..
Budget Speech 2018 with the then Finance Minister Malusi Gigaba
Ninety One also shared its take on the budget
While structural challenges persist, South Africa’s economic environment has become more stable under the Government of National Unity. Against this improved backdrop, the 2026 Budget reinforced fiscal discipline while providing inflationary relief for taxpayers and expanding financial planning opportunities. Malcolm Charles, Portfolio Manager, Fixed Income, and Jaco van Tonder, Advisor Services Director, discuss the Budget changes and how they may shape the financial planning landscape and South Africa’s economic prospects. |
A turning point for South Africa?
Planner Thoughts on the Budget
My thoughts on the budget :
“Tax collections came through much higher than anticipated.
Beforehand, what was needed from this budget speech was strong fiscal discipline to balance the budget and specific implementation measures to reduce Government Debt levels; that was certainly achieved.
Gross debt stabilises as a share of GDP in 2025/26, at 78,9 per cent. In 2026/27, it falls further, to 77,3 per cent of GDP and declines to 76,5 per cent by 2028/29.
For individuals, the inflationary relief to the Income Tax bands was a pleasing if somewhat surprise.
Many were looking for an announcement or indication in terms of the NHI, and the Treasury’s up-till-now limited to no appetite stance was again communicated, although somewhat indirectly, simply through the medical aid tax credits that were increased.
For the over 25 million on government grants, these were softly increased, and the Special COVID-19 Social Relief of Distress (grant) allowance was again extended as expected.
The increase in the offshore discretionary allowance to R2million per individual was welcomed, and this means that a married couple can now easily invest R4million per annum directly offshore (over and above the R10million per person per annum offshore tax clearance process).
This also gives overseas commentators a clear indication that SA is open for business, even while, through international Common Reporting Standards, SARS will still retain and collect its fair share.
We remain highly cautious of execution risk over and beyond the National Treasury’s scope. Nevertheless, remaining mindful of the risks, this was, overall, a better-than-expected Budget Speech.
“South Africa’s economic recovery is starting to gain traction”, according to our Finance Minister. The National Treasury has supported this recovery while remaining prudent.
Credit rating agencies will be satisfied, and we should see credit rating upgrades before the end of this year. This ought to be positive for the Rand and investment markets, where the government is also supporting more private investment initiatives than before, which is expected to increase.
Next, we need to see continued reform momentum to build on the current improved trajectory, translating the improved conditions into further investment, GDP growth, and a resilient economy.
Markets will like this Budget”.
FRIDAY FOOD FOR THOUGHT
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