By Anton van Heerden, Managing Director at DNA Outsourcing
Following the Budget Speech announcement that took place on 25 February 2026, introduced a series of updates that directly impact payroll processing for the 2026/27 tax year. From revised personal income tax thresholds to increased medical tax credits and updated travel rates, there are important changes employers need to be aware of.
We’ve broken down the key payroll and tax adjustments in a clear, practical infographic below. It covers what’s increased, what remains unchanged, and what this means for your business going forward.
As always, our team will ensure all payroll runs are updated in line with SARS requirements. You focus on running your business and our team will handle the compliance.
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A: For the 2026/27 tax year starting 1 March 2026, the tax-free threshold for individuals under 65 has increased to R99,000. For those aged 65 to 74, the threshold is R153,250, and for those 75 and older, it is R171,300.
A: Medical scheme fees tax credits have been adjusted for inflation. The credit for the first two beneficiaries is now R376 per month, while the credit for each additional dependant has increased to R254 per month.
A: The prescribed rate for business travel reimbursement has increased to R4.95 per kilometre, effective from 1 March 2026. This rate applies where an employee is reimbursed for business travel in a private vehicle.
A: No, the Corporate Income Tax rate remains unchanged at 27% for the 2026/27 fiscal year. However, the VAT registration threshold has been increased from R1 million to R2.3 million to support small businesses.
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