Income tax brackets & rebates, explained

If you've ever worried that earning a bit more might push you into a higher bracket and leave you worse off, this guide is for you. The short answer: that can't happen under South Africa's system. Here's why.

Brackets are marginal

Income tax is progressive and marginal. Your taxable income is divided into bands. The first slice is taxed at the lowest rate; only the income above each threshold is taxed at the next rate up.

So when you "move into the next bracket", only the rand you earn above that threshold are taxed at the higher rate, never your whole income. A raise always leaves more in your pocket.

Rebates and the tax threshold

After the bracket calculation produces a tax figure, SARS subtracts a rebate:

• Primary rebate: everyone receives it.
• Secondary rebate: added at age 65+.
• Tertiary rebate: added at age 75+.

Because the rebate is a flat subtraction, there's an income level at which the rebate fully cancels the tax due. That's the tax threshold: earn below it and you pay no income tax. The threshold is higher for older taxpayers precisely because they get more rebates.

Taxable income ≠ gross income

The brackets apply to taxable income, not your gross salary. Along the way you subtract things like retirement-fund contributions (within limits) and certain allowable deductions. Two people on the same salary can have very different taxable incomes, and therefore different tax.

A worked mental model

1. Add up income.
2. Subtract allowable deductions → taxable income.
3. Apply the marginal bracket table → tax before rebates.
4. Subtract rebates and medical credits → tax payable.
5. Subtract PAYE already withheld → amount owing or refundable on assessment.

TaxRationale does every one of these steps against the current SARS tables and shows the full nine-line computation, so you can see exactly where your number comes from.