Bonus and 13th cheque tax

The fast answer: a bonus is not taxed at a special penalty rate, and it does not push your whole salary into a higher bracket. SARS taxes a bonus with the difference method: it works out the tax on your salary plus the bonus, then subtracts the tax on your salary on its own, and what is left is the tax on the bonus. Only the rand of the bonus that spill into a higher band are taxed at that higher rate, so the effective rate on a bonus sits between your bands and never above your top one. The calculator below applies the SARS rate tables for the 2027 year of assessment and shows the tax on the bonus, your net bonus and the effective rate, as income tax only (UIF is a separate 1% contribution, not income tax).

Open the bonus tax calculator →

What the calculator works out

A bonus is not a separate kind of income with its own tax rate. It is added to the rest of your taxable income for the year and taxed on the ordinary SARS rate table (section 5 of the Income Tax Act). Because South Africa taxes income in marginal bands, the question is never "what rate is my bonus", but "which bands does the bonus fall into once it is stacked on top of my salary". The calculator answers that with the SARS difference method:

1. It works out the normal tax on your salary for the year.
2. It works out the normal tax on your salary plus the bonus.
3. The tax on the bonus is the difference between the two.

This is exactly how your final assessment treats it. Your employer might withhold PAYE on the bonus in the month it is paid, occasionally under a tax directive, but the tax that actually sticks for the year is this difference figure. The calculator shows three things: the tax the bonus adds, the net bonus you keep, and the effective rate on the bonus, which is the tax divided by the bonus. That effective rate is the number worth seeing: it is almost always lower than people fear, because only the slice of the bonus above a band threshold is taxed at the higher rate.

Worked example (show the workings)

Thabo is under 65. His salary is R370,000 for the year and his employer pays a R40,000 bonus. Using the SARS rate tables for the 2027 year of assessment, R370,000 sits in the 26% band and R410,000 (salary plus bonus) reaches into the 31% band.

The difference method splits the bonus across those two bands:

• From R370,000 up to the R383,100 band threshold: R13,100 taxed at 26% = R3,406.
• From R383,100 up to R410,000: R26,900 taxed at 31% = R8,339.

Tax on the bonus = R3,406 + R8,339 = R11,745. Net bonus = R40,000 minus R11,745 = R28,255. That is an effective rate of 29.36% on the bonus (R11,745 / R40,000), comfortably below the 31% band it partly reaches, and nowhere near the myth that half a bonus disappears to tax. Had Thabo's salary and bonus both sat inside a single band, the whole bonus would simply be taxed at that one rate.