How PAYE Works in South Africa
A plain-language guide to Pay-As-You-Earn income tax — how it's calculated, who pays it, and what your deductions actually mean.
What is PAYE?
Pay-As-You-Earn (PAYE) is South Africa's system for collecting income tax from salaried employees. Instead of paying a lump-sum tax bill once a year, your employer deducts income tax from your salary each month and pays it directly to SARS on your behalf.
The amount deducted each month is based on your projected annual income — your employer uses the official SARS tax tables and rebates to calculate what you're expected to owe for the full year, then divides it by 12.
PAYE is governed by the Income Tax Act No. 58 of 1962. The tax year runs from 1 March to the last day of February the following year. For 2026/2027 that means 1 March 2026 – 28 February 2027.
Who pays PAYE? Tax thresholds for 2026/2027
You only pay income tax if your annual gross income exceeds the tax threshold for your age group. Below these amounts, no PAYE is deducted.
| Age group | Annual threshold | Monthly equivalent |
|---|---|---|
| Under 65 | R99,000 | R8,250 |
| 65–74 | R153,250 | R12,771 |
| 75 and older | R171,300 | R14,275 |
Even if your income exceeds the threshold, only the amount above the threshold (after rebates) is taxed — so crossing the threshold does not make all your income suddenly taxable.
How PAYE is calculated — step by step
South Africa uses a progressive tax system: higher portions of income are taxed at higher rates. Only the income within each bracket is taxed at that bracket's rate — not your entire salary.
- 1 Annualise your income: Monthly gross salary × 12
- 2 Apply progressive brackets: Calculate the marginal tax owed in each bracket the income touches
- 3 Subtract age rebate: R17,820 (under 65), R27,585 (65–74), or R30,834 (75+)
- 4 Divide by 12: Annual tax ÷ 12 = monthly PAYE deduction
- 5 Add UIF: 1% of gross salary, capped at R177.12 per month
2026/2027 SARS income tax brackets
The seven progressive brackets below apply to individuals for the 2026/2027 tax year.
| Annual income (R) | Marginal rate | Tax on bracket |
|---|---|---|
| 0 – 245,100 | 18% | R0 + 18% of income |
| 245,101 – 383,100 | 26% | R44,118 + 26% above R245,100 |
| 383,101 – 530,200 | 31% | R79,998 + 31% above R383,100 |
| 530,201 – 695,800 | 36% | R125,599 + 36% above R530,200 |
| 695,801 – 887,000 | 39% | R185,215 + 39% above R695,800 |
| 887,001 – 1,878,600 | 41% | R259,783 + 41% above R887,000 |
| 1,878,601+ | 45% | R666,339 + 45% above R1,878,600 |
Source: SARS.gov.za · Full tax tables →
Worked example: R30,000 per month salary
Here's how PAYE is calculated for someone earning R30,000 gross per month (under 65, 2026/2027):
Effective tax rate: 15.6% · Marginal bracket: 26%
Try a different salary →Common salary examples (under 65, 2026/2027)
| Gross / month | Monthly PAYE | UIF | Net take-home | Effective rate |
|---|---|---|---|---|
| R15,000 | R1,215 | R150 | R13,635 | 8.1% |
| R25,000 | R3,381 | R177 | R21,442 | 13.5% |
| R30,000 | R4,681 | R177 | R25,142 | 15.6% |
| R45,000 | R9,276 | R177 | R35,547 | 20.6% |
Use the PAYE calculator for your exact salary and age group.
Age-based tax rebates
After calculating gross tax from the brackets, SARS subtracts a fixed rebate based on your age. This is why older taxpayers pay less tax on the same income — and why the same salary may be tax-free for someone over 65 but taxable for someone under 65.
Under 65
R17,820
Primary rebate
65 – 74
R27,585
Primary + secondary (+ R9,765)
75 and over
R30,834
Primary + secondary + tertiary (+ R3,249)
Example: A person aged 67 earning R20,000/month pays approximately R1,301 PAYE (effective rate 6.5%) — vs. R2,115 for someone under 65 on the same salary — because the higher rebate of R27,585 reduces their tax bill.
UIF — Unemployment Insurance Fund
UIF is a separate statutory deduction from PAYE. Both you and your employer each contribute 1% of your gross monthly salary, capped at R177.12 per month per party.
Employee contribution
1% of gross, max R177.12/month — deducted from your pay
Employer contribution
1% of gross, max R177.12/month — paid separately by employer
The cap applies to salaries above R17,712/month — above this level the UIF deduction stays flat at R177.12 regardless of salary size. UIF provides short-term income relief if you become unemployed, ill, or take maternity leave.
Note: domestic workers and some other categories have different UIF rules. Consult the Department of Labour for specifics.
PAYE frequently asked questions
Does PAYE apply to freelancers and contractors?
Generally not. PAYE applies to employees — if you're an independent contractor or sole trader, you're responsible for provisional tax payments instead. If you receive a fixed monthly payment and SARS considers you an employee, PAYE applies.
What if my employer deducts too much PAYE?
Over-deducted PAYE is refunded via your annual tax assessment (ITR12). Ensure your employer has your correct age group and any applicable deductions (retirement fund, medical aid) recorded on your IRP5 so the calculation is accurate.
Are bonuses taxed differently under PAYE?
Bonuses are added to your gross income and taxed at your marginal rate. Your employer may smooth the bonus across the remaining months of the tax year, which can temporarily increase monthly PAYE deductions.
What deductions reduce my PAYE?
Approved deductions include retirement annuity (RA) fund contributions (up to 27.5% of income, max R350,000), medical scheme fees tax credits, and qualifying travel allowances. This calculator applies rebates only — consult a tax professional for a full deduction analysis.
What does "effective tax rate" mean vs "marginal rate"?
Your marginal rate is the rate applied to each extra rand you earn — the highest bracket you fall into. Your effective rate is your total annual tax divided by your total income. Because lower income is taxed at lower rates, your effective rate is always lower than your marginal rate.
Calculate your exact take-home pay
Enter your gross salary below and see your PAYE, UIF, and net income in seconds — using official 2026/2027 SARS brackets.
Open PAYE Calculator →