South Africans are set to pay more for tobacco products, alcoholic beverages and fuel, as Finance Minister Enoch Godongwana announced what he calls “unavoidable tax increases for 2026/27 during his budget speech this afternoon. But there is also good news for grant beneficiaries and on the personal income tax front.
Here are the direct financial impacts of the 2026 National Budget on South Africans — focusing on changes that influence household income, expenses and everyday costs.
1. Personal Income Tax: Slight Relief
Government adjusted personal income tax brackets and rebates fully in line with inflation. This prevents “bracket creep,” where salary increases push taxpayers into higher tax brackets without real income growth.
What it means for you:
- Most taxpayers avoid an effective tax increase.
- Take-home pay is slightly protected against inflation.
- No broad-based new personal tax hikes were introduced.
2. Fuel Costs Will Rise
Fuel levies increase in line with inflation:
- General fuel levy: +9 cents per litre (petrol), +8 cents (diesel)
- Carbon fuel levy: +5–6 cents per litre
- Road Accident Fund levy: +7 cents per litre
What it means for you:
- Petrol and diesel prices increase.
- Transport costs rise.
- Knock-on effects likely on food prices and delivery costs.
3. Alcohol and Tobacco Become More Expensive
Excise duties increase:
- Beer/cider (340ml): +8 cents
- Wine (750ml): +15 cents
- Spirits (750ml): +R3.20
- Cigarette taxes increase by 77c for a pack of 20, raising retail prices.
What it means for you:
Higher retail prices for alcohol and tobacco products.
4. Social Grants Increase
From April 2026:
- Old age, disability and care dependency grants: increase to R2,400 (+R80)
- War veterans grant: R2,420 (+R80)
- Foster care grant: rises to R1,290 in April (and R1,300 in October)
- Child support grant: increases to R580 (+R20)
- Social Relief of Distress (SRD) grant continues for another year.
What it means for households:
- Slight income support boost for grant recipients.
- Helps offset rising living costs for vulnerable households.
5. Savings and Retirement: More Tax-Free Investing
Government increased tax-free savings incentives:
- Tax-free investment annual limit: R36,000 → R46,000
- Retirement fund tax deduction limit: R350,000 → R430,000
What it means for you:
- Higher-income and middle-income earners can save more without paying tax.
- Encourages long-term retirement savings.
6. Small Business Relief
Key changes affecting entrepreneurs:
- VAT registration threshold increases from R1 million to R2.3 million turnover.
- Capital gains tax exemption on qualifying small business sales rises from R1.8 million to R2.7 million.
What it means:
- Smaller businesses face less compliance pressure.
- Potentially improved cash flow and easier business growth.
7. Public Services That Affect Household Costs
Health
Additional funding for doctors and HIV/AIDS programmes aims to stabilise public healthcare services.
Impact: Reduced risk of staffing shortages and service disruption in public hospitals.
Education
Funding increases for early childhood development and school nutrition programmes.
Impact: Continued school meals and expanded early learning access reduce pressure on low-income households.
8. Municipal Services and Infrastructure
Government is tying funding to performance in water, electricity and sanitation services, with billions allocated to improve municipal infrastructure.
Impact over time:
- Intended to improve service delivery.
- May reduce infrastructure failures affecting electricity and water reliability.
9. Transport and Rail
Funding continues for passenger rail recovery to rebuild commuter train services, although some bus transport funding has been reduced due to poor performance.
Impact:
- Possible long-term improvement in rail commuting.
- Slower expansion of some city bus systems.
10. No Major New Taxes
Government withdrew previously planned tax increases worth R20 billion due to stronger revenue collection.
What this means: Households avoid additional broad tax pressure in 2026.
