How to Calculate PAYE South Africa 2025/2026

1. What is PAYE?

Pay As You Earn (PAYE) is a withholding tax on employees' remuneration. South African employers are legally obliged to deduct PAYE from employees' salaries every month and pay it to SARS by the 7th of the following month (or last business day before the 7th).

PAYE is governed by the Income Tax Act, 1962 (Fourth Schedule) and the Tax Administration Act, 2011. Failure to deduct or remit PAYE exposes the employer to significant penalties and personal liability.

2. Who must deduct PAYE?

All employers registered with SARS as employers must deduct PAYE from:

Full-time and part-time employees
Directors of companies (if remunerated)
Certain independent contractors who are "deemed employees"

Employees earning below the tax threshold (R95,750 for individuals under 65 in 2025/2026) are exempt from PAYE.

3. 2025/2026 Tax Brackets

Taxable Income (R)	Tax Rate
0 – 237,100	18%
237,101 – 370,500	R42,678 + 26% above R237,100
370,501 – 512,800	R77,362 + 31% above R370,500
512,801 – 673,000	R121,475 + 36% above R512,800
673,001 – 857,900	R179,147 + 39% above R673,000
857,901 – 1,817,000	R251,258 + 41% above R857,900
Above 1,817,000	R644,489 + 45% above R1,817,000

4. Tax Rebates

Rebate	Annual Amount	Who qualifies
Primary	R17,235	All taxpayers
Secondary	R9,444	Age 65 and over
Tertiary	R3,145	Age 75 and over

5. Key Deductions

Pension / Provident Fund / RAF

Employee contributions to approved pension, provident, or retirement annuity funds are deductible. The deduction is limited to the lesser of:

27.5% of the greater of remuneration or taxable income, and
R350,000 per year

Medical Tax Credit (MTC)

The medical tax credit reduces PAYE by a fixed monthly amount:

R364/month for the main member
R364/month for the first dependant
R246/month for each additional dependant

6. Step-by-Step PAYE Calculation

1
Annualise the gross salary: Monthly gross × 12 = annual gross income
2
Subtract pension deduction: Min(27.5% of income, R350,000). Annualise the monthly pension contribution first.
3
Apply tax brackets: Use the 2025/2026 tables to determine gross tax on the taxable income.
4
Subtract rebates: Primary rebate (R17,235) + Secondary (R9,444 if ≥65) + Tertiary (R3,145 if ≥75).
5
Subtract medical tax credits: Annual MTC = (R364 × first 2 dependants + R246 × further dependants) × 12.
6
De-annualise: Annual PAYE ÷ 12 = monthly PAYE to withhold.

7. Worked Example

Employee: Age 35 · Monthly gross R30,000 · Pension R1,500/month · Medical aid (self + 1 dependant)

Annual grossR360,000

Less pension (capped at 27.5%: R18,000 × 12)(R18,000)

Taxable incomeR342,000

Tax on R237,100R42,678

26% on R104,900 (342,000–237,100)R27,274

Gross taxR69,952

Less primary rebate(R17,235)

Less MTC (R364 + R364) × 12(R8,736)

Annual PAYER43,981

Monthly PAYE (÷12)R3,665

Try this in the calculator →

8. Submitting PAYE to SARS

EMP201 — Monthly employer return. Submit and pay by the 7th of each month.
EMP501 — Biannual reconciliation (August + May). Reconciles amounts deducted vs declared.
IRP5 / IT3(a) — Tax certificates issued to employees at year-end.
Late payments attract a 10% penalty plus interest at the SARS prescribed rate.

How to Calculate PAYE in South Africa