Summarised by Jeremy Squier, Wealth and Asset Advisors
With analytical support from MS Copilot
The following is our extract of what we believe to be the most important detail arising from today’s budget speech. First those details which will have immediate impact for normal South Africans followed by the narrative around circumstances which led to the strategic focus in the Budget. As South Africans let’s reflect on how badly our country was governed post-2008 and the fact that our democracy and the constitutional right to Freedom of Speech brought us back from oblivion. We must never forget that we have got progressively poorer over this time and the fact that “absolute power corrupts absolutely”. The fact that the 2025/26 budget was delayed for so many months shows that we at last have a level of accountability and kick-back. Let’s all make sure that this continues forever.
Tax Relief for Households and Businesses
Personal Income Tax
Government will adjust personal income tax brackets and rebates fully in line with inflation — the first full adjustment since 2023.
Medical Aid Tax credits
These have been adjusted in line with inflation which is good news for medical aid principal members.
Encouraging Savings
To support long‑term household saving, two limits have been increased:
- The annual tax‑free investment limit rises from R36 000 to R46 000
- The annual limit for tax‑deductible retirement fund contributions increases from R350 000 to R430 000
Capital Gains Tax adjustments
The annual exclusion for individuals and special trusts has been increased to R50 000 per tax year.
Primary residence exclusion is increased to R 3 million.
Exclusion in an individual’s estate is increased to R440 000 in the year of death
Other meaningful adjustments for individuals
Donations by natural persons increased to R150 000 per tax year
Single discretionary allowance under Exchange Controls has been doubled to R2 million per taxpayer per annum without prior SARS approval
Travel allowance rates per kilometre have been increased to accommodate for inflation
Support for Small Businesses
Government has introduced several measures to lighten the administrative and tax burden on smaller enterprises:
- Compulsory VAT registration threshold increases from R1 million to R2.3 million
- Capital gains tax exemption for older owners selling a small business rises from R1.8 million to R2.7 million, and qualifying business value increases from R10 million to R15 million
Fuel and Sin Taxes
As expected, sin taxes rise again this year. Fuel levies also increase in line with inflation:
- General fuel levy: +9c per litre (petrol), +8c per litre (diesel)
- Carbon fuel levy: +5c (petrol), +6c (diesel)
- Road Accident Fund levy: +7c per litre
A Turning Point for South Africa’s Public Finances
South Africa has reached an important milestone in restoring stability to its public finances.
Five years ago, the fiscal outlook was strained due to weakened institutions, a downgrade to junk status, global economic shocks, and placement on the FATF grey list.
Due to pressure from within the GNU, Treasury has responded with a disciplined, clearly structured reform agenda focused on stabilising debt, investing in infrastructure, and improving spending quality.
Today, these reforms are showing meaningful results:
- Debt is stabilising for the first time in 17 years
- The budget deficit and debt‑service costs have both declined
- South Africa has been removed from the FATF grey list
- The country has secured its first credit rating upgrade in 16 years
- Borrowing costs have begun to fall
Domestic Economic Outlook
Growth prospects are gradually improving. Government’s strategy rests on four pillars:
- Maintaining macroeconomic stability
- Advancing structural reforms
- Investing in infrastructure that supports growth
- Strengthening state capacity
Fiscal Strategy
Government’s fiscal strategy includes four major priorities:
- Supporting economic growth by accelerating public investment
- Improving the efficiency of public spending
- Shifting the composition of spending toward investment
- Anchoring fiscal planning in long‑term sustainability
Progress on Structural Reforms
Energy
Reforms continue to stabilise electricity supply while encouraging private investment and expanding renewable generation.
Logistics
Work is underway to remove bottlenecks in rail and port systems, improving export capacity and lowering business costs.
Local Government
A transition toward performance‑linked utility models aims to strengthen financial sustainability and accountability in water and electricity services.
Government Spending Priorities
Government expects to spend R2.67 trillion in 2026/27, including R5 billion for disaster‑related contingencies.
The social wage remains a central priority:
- Education, health, and social protection make up 70.3% of the social budget
- Healthcare services reach 84% of the population
- Social grants support 26.5 million beneficiaries
Social Grants
Total allocation for social grants in 2026/27: R292.8 billion
Peace and Security
Spending will increase from R268.2bn to R291.2bn by 2028/29 to support stronger policing and defence operations, including efforts against illegal mining and gangsterism.
Revenue Division
Nationally raised revenue will be divided as follows:
- 48.9% to national government
- 41.7% to provinces
- 9.4% to municipalities
Public‑Private Partnerships
Revised PPP regulations have streamlined processes and strengthened the framework for private investment.
There are currently 63 projects at various stages, and the final municipal PPP regulations will be published by 30 June 2026.
Conclusion
This Budget marks a period of renewed fiscal stability and clearer policy direction. Households benefit from tax relief and improved incentives to save, while small businesses gain from higher thresholds and expanded exemptions. At the same time, the continued focus on investment, infrastructure and reform signals a long‑term commitment to growth and sustainability.
