2025 Budget tax proposals: How it will affect your pocket

Finance Minister Enoch Godongwana has tabled the 2025 Budget, with a limited range of tax proposals.

The relevant Parliamentary Committees will now meet to discuss the proposals. Thereafter, a Parliamentary debate will take place, and it will be voted on.

The Minister’s proposal to increase VAT could be especially unpopular.

Here are some ways the Budget could affect your pocket:

VAT increase

The proposal is to increase value-added tax (VAT) by 0.5 percentage points from the beginning of May and by the same amount the following year.
This means that VAT will be charged at 15.5% in the current financial year and 16% from April next year.
This is expected to bring in R13.5 billion more VAT for the state until the end of March next year. The year after that, the extra revenue will amount to R14.3 billion plus R15.5 billion for the next 0.5 percentage point increase.

More food exempted from VAT

Tax relief of R2 billion is proposed by expanding the number of food products that are VAT exempt.
There are already 21 essential food items on which VAT is not levied.
This now also includes edible offal of sheep, poultry, goats, swine, and bovine animals; specific cuts such as heads, feet, bones, and tongues; dairy liquid blend; and tinned or canned vegetables.

No personal income tax relief

There is no relief with personal income tax.
When tax brackets are not adjusted with inflation, your next salary increase could move you into a higher tax bracket in which you would pay more tax.
Treasury wants to collect R18 billion more in personal income tax this year.

Medical aid credits not increased

Medical aid credits that give tax relief to medical aid members have not been adjusted for inflation.
It remains R364 per month for the main member and a first dependant and R246 per month for the remaining dependants.

Fuel levy unchanged

The fuel levy has not been increased, which means about R4 billion less revenue per year for the Treasury.

Sin-Taxes

The proposed increase in the excise duty on liquor is 6.75%, while the proposed increase in the excise duty on tobacco products is 4.75%.
It would result in the following increases:
Beer: 16c more per 340ml can
Unfortified wine: 29c more per 750ml bottle
Wine: 48c more per 750ml bottle
Sparkling wine: 90c more per 750ml bottle
Ciders and alcoholic fruit beverages: 16c more per 340ml can
Spirits: R5.97 more per 750ml bottle
Cigarettes: R1.04 more per packet of 20
Heated tobacco product sticks: 77c more per packet of 20
Cigarette tobacco: R1.16 more per 50g
Pipe tobacco: 50c more per 25g
Cigars: R8.49 more per 23g
Nicotine and non-nicotine solution for electronic delivery systems (vapes): 14c more per ml

Social grants

From April, social grants for the elderly, war veterans, the disabled and care dependents will increase by R130 to R2 315 per month.
The foster care grant will increase by R70 to R1 250.
The child grant will increase by R30 to R560.
The SRD grant of R370 per month will remain for another year and R35.2 billion has been budgeted for it.

Help for those who want to buy property

The transfer duty thresholds for buying property have been adjusted upwards by 10% to make provision for inflation.
This will come into effect at the beginning of April.
Previously, only property costing less than R1.1 million would be excluded. This has now been increased to R1.21 million. The other thresholds have also been moved up accordingly.

The bottom line is that Treasury is trying to balance the books. With economic growth not keeping pace with expenditure needs, and burgeoning debt, the Finance Minister needs to find ways to boost income. For 2025/26 most of that additional income is proposed to come from additional tax.