2026/27 Budget Speech

The Budget Speech delivered by Finance Minister Enoch Godongwana on the 25th of February 2026 gave the South African public a sense of cautious optimism for the year ahead.

Real economic growth is forecast at 1.6% in 2026, and is expected to rise to about 2% by 2028.

R2.67 trillion has been allocated for the 2026/27 budget, with over R1 trillion planned for infrastructure investment over the medium term, focusing on transport, water, energy and logistics to boost growth potential.

Higher-than-expected revenue collections and strong commodity prices have enabled the National Treasury to avoid making significant tax changes. There was no tax bracket creep this year for the first time in 2 years, allowing taxpayers salaries to adjust for inflation:

Tax Policy & Revenue Measures

• The government withdrew a previously proposed R20 billion VAT increase, easing pressure on households and businesses. 
• Personal income-tax brackets and rebates are fully adjusted for inflation, helping taxpayers keep pace with price increases.
• Medical Aid Tax Credits increased to: R376 for each of the first two dependants and R254 for each additional dependant.
• The tax-free savings annual limit rises from R36 000 to R46 000, and the retirement fund deduction limit increases from R350 000 to R430 000, encouraging savings. 
• The VAT registration threshold for small businesses increases from R1 million to R2.3 million, designed to support SMEs.
• The CGT (capital gains tax) exemption on selling a small business increases from R1.8 million to R2.7 million. This applies to small businesses worth R15 million instead of the R10 million previously.
• Certain excise duties (tobacco, alcohol), the Fuel Levy, Carbon Tax on Fuel and the Road Accident Fund (RAF) Levy will rise in line with inflation.
• For local investors looking to diversify offshore, the Single Discretionary Allowance for individuals has been increased from R1 million to R2 million per calendar year.
• There is no change to the VAT rate, which remains at 15%.
• Corporate income tax remains at 27%.
• A retirement fund member whose interest in a retirement fund falls below the de minimis limit can have the entire interest commuted and paid as a lump sum instead of annuitizing at least two-thirds of the interest. The prescribed limit will increase from R247 500 to R360 000 from 1 March 2026.
• A living annuity can be commuted and paid as a lump sum when the value of the assets falls below the de minimis limit. The prescribed limit will increase from R125 000 to R150 000 from 1 March 2026.

The Treasury’s fiscal strategy, built on stabilising debt, investing in infrastructure, and better spending has started to show tangible results of renewed credibility-

• Debt is stabilising for the first time in 17 years at 78.9% of GDP (2025/26), and will decline thereafter
• South Africa has been removed from the FATF grey list (Financial Action Task Force)
• The country secured its first credit rating upgrade in 16 years
• Borrowing costs have eased, creating space for growth and development

After several challenging years marked by economic disruption and pressure on public finances, the 2026 Budget suggests that South Africa may be turning a corner. Improvements in fiscal discipline, together with a more cohesive policy framework within the GNU, are beginning to restore stability.

Overall, the 2026 Budget delivers encouraging news for South African citizens, offering welcome relief for individual taxpayers and small businesses while promoting savings and investment.

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