Income tax is the government’s main source of income and is levied in terms of the Income Tax Act (No 58 of 1962).

Income tax is levied on the taxpayer’s income. Tax is levied on your taxable income which consists of your gross income after taking off deductions that are allowed by the Act. Individual tax rates are between 18% and 40%. Trusts pay tax at 45% and is levied on any income retained in the Trust. 

Companies and CCs are taxed at a rate of 27% of taxable income.

From February 2026 qualifying Small Business Corporations (SBCs) are subject to the following progressive tax rates:  

• 1 to R99 000: 0% of taxable income
• R99 001 to R365 000: 7% of taxable income above R99 000
• R365 001 to R550 000: R18 620 + 21% of taxable income above R365 000
• R550 001 and above: R57 470 + 27% of the amount above R550 000

There are strict SARS requirements for a business wanting to qualify as a Small Business Corporation.

For micro businesses the qualifying annual turnover threshold is R2.3 million. The 2026/2027 tax rates for qualifying micro businesses are:

• 0 to R600 000: 0% of taxable income
• R600 001 – R950 000: 1% of the taxable amount above R600 000
• R950 001 – R1 400 000: R3 500 + 2% of the amount above R950 000
• R1 400 001 and above: R12 500 + 3% of the amount above R1 400 000