How Does SARS Calculate Tax?

By Dave Nyam •  Updated: 01/10/25 •  6 min read

Taxes are an essential component of any functioning economic system in any nation. For instance, South Africans must submit their tax payments to the South African Revenue Service annually (SARS). Also, various government initiatives, including education, healthcare, infrastructure, and social services, are funded through taxes. And in this post, we will examine SARS’s methodology to compute taxes. Let’s dive in!

- ADVERTISEMENT -

How does SARS calculate tax?

Have you ever wondered how SARS calculates your tax? Understanding how your taxes are calculated is essential because it helps you better manage your finances and plan for your future.

SARS uses a taxpayer’s taxable income to calculate their tax due, usually expressed as an amount, a percentage, or a combination of both. In South Africa, taxpayers are liable to pay income tax based on the following categories:

For taxpayers between 65 – 75 years old, the tax threshold will be R141 250. And for taxpayers 75 years and older, the tax threshold will be R1157 900.

It is important to note that the average tax rate in South Africa in 2025 is 12.5%, and the marginal tax rate is 26%. The marginal tax relates to the immediate additional income that will be taxed at the marginal rate. Therefore, this means an increase of R10 in your earnings will be taxed R2.60, and your net pay will increase by R7.40.

Also, SARS uses a pre-determined rate to calculate each type of tax due based on the income received by the taxpayer. For instance, if your taxable income is ZAR 200,000, your tax due will be calculated as follows:

The first ZAR 226,000 will be taxed 18%, which equals ZAR 40,680. The remaining ZAR 0 will be taxed at 0%, which equals ZAR 0. Therefore, your total tax due is ZAR 40,680.

How is income tax calculated in South Africa?

South Africans must pay income tax to grow and run the country, and it’s an annual tax on your income from March 1 to February 28. Also, remember parliament sets income tax rates, which the Minister of Finance announces in the yearly budget speech.

The more you make, the more you pay on a sliding scale, and marginal or statutory tax rates apply in these cases. So, the larger your income, the higher your tax rate.

Also, remember SARS calculates each tax depending on taxpayer income using a pre-determined rate, and tax rates are stated as amounts, percentages, or both. From March 1, 2025, until February 28, 2025, the tax rates are:

Generally, paying a fair amount of taxes is necessary because they help operate the country.

What percentage does SARS take from your salary?

SARS will deduct a portion of your salary to pay income tax when you receive your earnings. This money funds various public services, such as healthcare, education, and infrastructure development. But how much does SARS take from your hard-earned cash?

- ADVERTISEMENT -

Well, that depends on how much you earn. SARS uses a sliding scale to determine the amount of tax you owe, with higher earners paying a higher percentage. For example, if you earn between R1 and R226,000 per year, you will be taxed at 18%. If you make between R226,001 and R353,100, you will pay R40,680 plus 26% of the amount above R226,000. The percentage increases as your income increases.

According to SARS tax statistics for 2025/26, the average tax rate across all taxpayers in South Africa is 22.4%. Therefore, SARS will deduct approximately 22.4% of your income to pay taxes if you earn an average salary. However, it’s important to note that this is just an average, and your pay percentage will depend on your specific income level.

While paying taxes may not be the most enjoyable part of earning a salary, it’s an essential part of being a responsible citizen and contributing to the growth and development of your country.

How much tax does SARS take?

SARS takes a percentage of your salary based on the amount of money you earn in a year. This tax is called Income Tax, the most common tax paid in South Africa.

Your taxable income determines this income tax you pay to SARS. The taxable income is calculated by subtracting any deductions and exemptions from your annual income. Furthermore, the Income Tax rates in South Africa are progressive, meaning that the more you earn, the higher the percentage of tax you pay.

For example, if you earn between 1 and 226 000 ZAR per year, SARS will take 18% of your taxable income as tax. If you make between 226 001 and 353 100 ZAR per year, you will pay 40 680 ZAR plus 26% of your taxable income above 226 000 ZAR. The higher your income, the higher the percentage of your income that you will pay in tax.

There are other taxes you might have to pay to SARS, such as Donations Tax, Estate Duty, and Securities Transfer Tax, among others. However, Income Tax is usually the most significant type of tax you will pay to SARS, and it’s essential to ensure that you file your tax returns on time to avoid any penalties.

What is the minimum salary to pay tax in South Africa?

You may be asking if you have to pay taxes in South Africa and, if so, at what wage level that begins. The good news is that if your annual income is less than R91,250, you won’t owe any taxes (for the 2025 tax year). That’s true. If your yearly earnings are below this level, you owe zero in taxes. More than this threshold, however, and you will be subject to the tax rates and brackets established by SARS. Be cautious about monitoring your earnings and stay within the parameters set forth by the law to avoid fines.

Conclusion

Determining your tax liability in South Africa requires detailed information about your income, deductions, and other finances. You must understand how SARS decides your tax liability to comply with tax regulations and remit the appropriate amount. You may decrease your tax burden by making the most of your deductions and getting professional help with your taxes. Also, remember that fulfilling your tax responsibility is not only the right thing to do but also an investment in the growth and prosperity of your country and its people.

- ADVERTISEMENT -

Keep Reading

How to Request A Correction On SARS eFiling

How to Request A Correction On SARS eFiling

In simple steps, learn how to request a correction on SARS eFiling. Avoid penalties, interest, or legal action by correcting errors on your tax return.

How to Remove a User From SARS eFiling

How to Remove a User From SARS eFiling

Learn how to remove a user from your SARS eFiling account in just a few easy steps. Keep your tax information secure and control who has access to your account.

How to Get SARS ITA34

How to Get SARS ITA34

How to Get SARS ITA34. Today we walk you through everything to do with your ITA34 and what you need to know.

How to Submit My Documents to SARS eFiling

How to Submit My Documents to SARS eFiling

How to Submit My Documents to SARS eFiling. This article will provide you with a comprehensive guide on submitting your documents to SARS.

How Does Tax On Bonuses Work in South Africa?

How Does Tax On Bonuses Work in South Africa?

How Does Tax On Bonuses Work in South Africa? We are here with this helpful guide to taxation and bonuses in South Africa.

How to Submit EMP501 on e@syFile™

How to Submit EMP501 on e@syFile™

This article will guide you through submitting your EMP501 on SARS eFiling, including the requirements, necessary steps, and tips for ensuring a successful submission.

Can You Claim Tax Returns For Previous Years?

Can You Claim Tax Returns For Previous Years?

This article provides a comprehensive guide on how to claim tax returns for previous years

How To Register To Pay SDL

How To Register To Pay SDL

Learn how to register for SDL in South Africa. Meet your legal obligation and contribute to the growth of the country's workforce by understanding the requirements and making payments. Get expert guidance here.

How to Register for Tax at SARS?

How to Register for Tax at SARS?

Today we will walk you through the complete process of registering for tax with SARS.

How to Register With SARS as a taxpayer

How to Register With SARS as a taxpayer

In this article, we’ll discuss how to register with SARS as a taxpayer and answer some of the common questions users have when using eFiling. 

How to Check SARS Tax Compliance Status

How to Check SARS Tax Compliance Status

Today, we are diving deeper into how to check (and prove) your SARS tax compliance status if you need to

How to Register for PAYE on eFiling

How to Register for PAYE on eFiling

By far, the easiest way to pay PAYE and remain compliant is to register for the PAYE tax type on SARS eFiling- and here's how to do that.

How Does SARS Allocate Unallocated Payments?

How Does SARS Allocate Unallocated Payments?

Today we break down unallocated payments further, so you can better understand and remedy them with SARS.

How to Transfer a Profile on Efiling

How to Transfer a Profile on Efiling

In this post, we explain everything you want to know about how you can transfer a profile on eFiling.  

How to Emigrate Tax From South Africa

How to Emigrate Tax From South Africa

How to Emigrate Tax From South Africa. Keep on reading to learn how you emigrate tax from South Africa.