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This afternoon, the South African Minister of Finance delivered the highly anticipated 2025 Budget Speech.

Finance Minister Enoch Godongwana recently delivered the 2025 Budget Speech, outlining the government’s fiscal priorities in a challenging economic environment. However, it is important to note that Cabinet had not approved the budget before the speech, marking an unprecedented shift in the budgetary process. The postponement of the main budget from February to March reflects ongoing political debates, particularly regarding tax policy and economic growth strategies.

Key Highlights
The 2025 Budget reflects a careful balance between fiscal responsibility and the need to drive economic growth. However, the revised economic growth projections and widening deficit highlight the difficulties ahead. Additionally, the focus on early education is a promising step toward addressing foundational learning deficits, which are critical for long-term economic progress.

Value-Added Tax (VAT) Adjustments.
One of the most significant announcements this year is the proposed increase in VAT from 15% to 15.5%, effective May 1, 2025, with an additional 0.5 percentage point increase planned for 2026. The DA and other political parties have strongly opposed any VAT hike, arguing that it will place further strain on consumers. Disagreements within the Government of National Unity (GNU) cabinet mean that the VAT proposal will still need to be debated and voted on in Parliament, with the ANC seeking broader political support.

Personal Income Tax Brackets and ‘Bracket Creep’
While the government has opted for a lower-than-initially-proposed VAT increase, this decision comes at the expense of taxpayers. There will be no adjustment for inflation in personal income tax brackets for the 2025/26 tax year, exacerbating ‘bracket creep.’ Since tax brackets have not been adjusted since 2023, this effectively increases the tax burden on individuals whose salaries rise with inflation but who see no real increase in purchasing power.

What This Means for You
As these developments unfold, our team remains committed to keeping you informed and helping you navigate the implications of these changes for your financial and operational strategies. We will continue to monitor the implementation of budgetary measures and provide expert guidance to ensure a seamless transition.

Stay tuned for our upcoming analyses and consultations, where we will explore these topics in depth and address any questions you may have. Your success remains our top priority, and we are dedicated to supporting you through these changes

High Level Summary:

Medical Aid
• Medical Aid Tax Credits have remained unchanged to R 364 for each of the first two dependents and R 246 for each additional dependant thereafter.

Subsistence Allowance
• Meals and incidental costs, an amount of R570 is deemed to have been expended per day; or
• Incidental costs only, an amount of R176 is deemed to have been expended per day.

Reimbursive Travel Rate
• Where an allowance or advance is based on the actual distance travelled by the employee for business purposes, no tax is payable on an allowance paid by an employer to an employee, up to R4.76 per kilometre, regardless of the value of the vehicle. However, this alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle.

Travel Allowance
• Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined using the following table:

Tax rate
• Tax rates from 1 March 2025 to 28 February 2026 | Individuals and special trusts

Tax Rebates and Tax Thresholds 

Other Topical Changes

With effect from 1 March 2025, the NMW will be:

• R28,79 per ordinary hour worked;
• R28,79 per ordinary hour for farm workers;
• R28,79 per ordinary hour for domestic workers;
• R15,83 per ordinary hour for workers employed on an expanded public works programme.

The Basic Conditions of Employment Act (BCEA) earnings threshold, revised the rate from R254 371.67 pa to R261 748.45 pa, effective from 1 April 2025

Make use of our updated and easy-to-use PAYE calculator: Tax Calculator

Need Assistance?
If you have any questions or need advice on navigating the new regulations, feel free to reach out to us. Get in touch today.