How SARS works out your PAYE (2026/27)
Figures for the 2026/27 tax year. Prime rate checked 1 October 2026; tax tables and fees checked 30 September 2026. By AfroTech.
PAYE (Pay As You Earn) is the income tax your employer deducts from your salary every month and pays over to SARS. It looks complicated on a payslip, but it comes down to four steps. Here's exactly how it works for the 2026/27 tax year, using SARS's own tables.
The short version
- Your employer works out the tax on your whole year's salary, then divides it by 12.
- Tax is charged in brackets from 18% to 45%. Each rate applies only to the slice of income in its bracket.
- Everyone gets a rebate of R 17 820 a year, so the first R 99 000 of income is tax-free if you're under 65.
- Medical aid and retirement contributions reduce your tax. UIF of 1% is deducted separately, up to R 177,12 a month.
A worked example: R 30 000 a month
Step 1: Annualise the salary
Your employer multiplies your monthly salary by 12: R 30 000 × 12 = R 360 000 a year. This is your taxable income, before any deductions.
Step 2: Apply the SARS tax table
R 360 000 falls in the bracket from R 245 101 to R 383 100. SARS charges R 44 118 on the income below this bracket, plus 26% of everything above R 245 100:
R 44 118 + 26% × (R 360 000 − R 245 100) = R 73 992
Step 3: Subtract the rebate
Everyone under 65 gets the primary rebate of R 17 820. R 73 992 − R 17 820 = R 56 172 income tax for the year. Divided by 12, that's R 4 681,00 PAYE a month.
Step 4: Deduct UIF
UIF is 1% of your salary, capped at R 177,12 a month. On R 30 000 that's R 177,12. Your employer pays the same amount again on top.
| Payslip line | Amount |
|---|---|
| Gross salary | R 30 000,00 |
| PAYE | −R 4 681,00 |
| UIF | −R 177,12 |
| Take-home pay | R 25 141,88 |
Your marginal rate vs your average rate
On R 30 000 a month, your marginal rate is 26%: that's the tax on your next rand of income, and on any increase or bonus. But your average rate is only 15,6%, because the lower slices of your income are taxed at lower rates or not at all. Moving into a higher bracket never reduces your take-home pay; only the extra income is taxed at the higher rate.
How medical aid lowers your PAYE
SARS gives a fixed tax credit for each person on your medical aid: R 376 a month each for you and your first dependant, and R 254 for each additional dependant. It comes straight off your tax, whatever you earn.
In our example, with two people on the medical aid, PAYE drops from R 4 681,00 to R 3 929,00 a month.
How retirement contributions lower your PAYE
Contributions to a pension, provident or retirement annuity fund are deducted from your income before tax is worked out, up to 27,5% of your income and R 430 000 a year. If our example employee contributes R 2 000 a month to a pension fund, their PAYE falls by R 520,00. In effect, the R 2 000 contribution only costs them R 1 480,00.
Why bonuses feel smaller
A bonus or 13th cheque is added to your income for the year, so it's taxed entirely at your marginal rate. If our example employee gets a bonus of one month's salary (R 30 000), SARS takes R 8 145 of it and they receive R 21 855, far less than a normal month's take-home pay.
PAYE at different salaries
| Gross per month | PAYE | UIF | Take-home | Average rate |
|---|---|---|---|---|
| R 10 000 | R 315 | R 100,00 | R 9 585 | 3,1% |
| R 20 000 | R 2 115 | R 177,12 | R 17 708 | 10,6% |
| R 30 000 | R 4 681 | R 177,12 | R 25 142 | 15,6% |
| R 50 000 | R 11 076 | R 177,12 | R 38 747 | 22,2% |
| R 80 000 | R 22 658 | R 177,12 | R 57 165 | 28,3% |
| R 120 000 | R 39 058 | R 177,12 | R 80 765 | 32,5% |
Under 65, no medical aid or retirement contributions, 2026/27 tax tables.
Who pays no income tax
If your income for the year is below the tax threshold for your age, you pay no income tax at all (UIF still applies):
| Age | Tax-free up to (per year) | Per month |
|---|---|---|
| Under 65 | R 99 000 | R 8 250 |
| 65 to 74 | R 153 250 | R 12 771 |
| 75 and older | R 171 300 | R 14 275 |
Why your payslip might be different
- Fringe benefits such as a company car, travel allowance or low-interest loan are added to your taxable income.
- Irregular pay, like overtime or commission, changes the annualised figure from month to month.
- Two employers or a side income: each employer only sees its own salary, so you may owe more tax when SARS assesses your return.
- Small differences of a few rand come from how payroll systems round, or from SARS's monthly deduction tables.
Your final tax is only settled when you file your annual return. PAYE is SARS's best estimate along the way.
Try it with your own numbers. The ZARWise calculator uses the same figures as this page.
Work out your own take-home pay