2026 Budget Speech: Complete Guide for SA Accountants

Every year, the Budget Speech lands and accountants across South Africa face the same challenge: how do you turn 90 pages of government policy into something your clients can actually understand and act on? This year, Finance Minister Enoch Godongwana delivered the 2026 Budget Speech on 25 February, and it brought some genuinely good news.

The proposed R20 billion tax increase was scrapped. Personal income tax brackets were adjusted for inflation. The VAT registration threshold more than doubled. And savings limits that had been frozen for years were finally updated.

In this guide, we break down everything accounting firms and their clients need to know.

What Actually Changed in the 2026 Budget? (The Short Answer)

The 2026 Budget focused on fiscal stability and targeted relief rather than sweeping reforms. The headline changes for accountants and their clients are: the R20 billion VAT increase was withdrawn; personal income tax brackets were fully inflation-adjusted; the compulsory VAT registration threshold increased from R1 million to R2.3 million; the Tax-Free Savings Account annual limit rose from R36,000 to R46,000; and the retirement fund deduction cap increased from R350,000 to R430,000.

Personal Income Tax: Inflation Relief for Individuals

The most immediate impact for individual taxpayers is that personal income tax brackets and rebates have been adjusted fully in line with inflation. This means employees won't be pushed into higher tax brackets simply because their salaries kept pace with rising prices, a phenomenon known as "bracket creep".

In many previous budgets, government quietly relied on bracket creep to collect more revenue without announcing a formal tax increase. This year, full inflation-linked relief was applied, a genuine win for salaried employees and their employers managing PAYE.

What This Means in Practice

Payroll teams should ensure their systems reflect the updated 2026/27 tax tables once SARS publishes them. Employees earning a salary that increased with CPI will see a marginally lower PAYE deduction. Those who received above-inflation increases will keep more of that raise.

The tax thresholds, the income levels below which no tax is payable, have also been adjusted upward. Taxpayers under 65 will now only start paying tax once earnings exceed the updated threshold (confirm final figures at www.sars.gov.za).

VAT: A Major Win for Small Businesses and Consumers

Two significant VAT developments emerged from this Budget.

First: the proposed R20 billion VAT increase, which had been provisionally included in the May 2025 Budget, was fully withdrawn. Stronger-than-expected revenue collection from VAT, corporate income tax, and dividends tax made the increase unnecessary. For consumers and businesses, this means no increase in the cost of almost everything, a significant relief.

Second, and arguably more impactful for smaller businesses: the compulsory VAT registration threshold has been increased from R1 million to R2.3 million per year.

What the New VAT Threshold Means for Your Clients

The R1 million threshold had not kept pace with the cost of doing business and was forcing many small businesses into VAT administration that didn't make sense at their scale. At R2.3 million, this is a meaningful correction.

Accounting firms should review their client lists and identify any businesses currently registered for VAT with turnover below R2.3 million. Deregistration may simplify their compliance burden significantly. Note that voluntary VAT registration remains available and may still be advantageous for businesses with significant input costs. This is a firm-by-firm conversation worth having.

VAT remains at 15%. No changes to the standard rate were announced.

Savings and Retirement: Bigger Limits for Tax-Efficient Planning

Two important savings-related thresholds were increased substantially, making 2026 a good year to revisit retirement and investment planning with clients.

Tax-Free Savings Accounts (TFSAs)

The annual contribution limit to TFSAs increases from R36,000 to R46,000 per year, a R10,000 increase that can now grow and be withdrawn completely tax-free. For clients who consistently maximise their TFSA contributions, this means an additional R10,000 per year working in a tax-efficient environment.

Retirement Fund Deduction Cap

The maximum tax-deductible retirement fund contribution has increased from R350,000 to R430,000 per year. Contributions to pension funds, provident funds, and retirement annuities are deductible up to 27.5% of the higher of remuneration or taxable income, now capped at this higher ceiling.

This is especially relevant for business owners, high-earning professionals, and anyone playing catch-up on retirement savings. Running updated projections for these clients is a value-added service that distinguishes proactive firms.

What Changed for Small Business Owners?

Beyond the VAT threshold increase, two further changes affect small business owners specifically.

Capital Gains Tax Relief on Sale of a Business

The capital gains tax exclusion on the sale of a small business has been increased for owners aged 55 and over. The exclusion amount rises from R1.8 million to R2.7 million, and the qualifying business value ceiling increases from R10 million to R15 million.

For clients with succession planning on the horizon, this change may materially affect their timing and structure. This is worth proactively raising with relevant clients rather than waiting for them to ask.

SARS Enforcement Is Intensifying

SARS has continued to invest heavily in AI-driven data analytics and enforcement capabilities. The message from this Budget is consistent: SARS is getting better at finding non-compliance, and the cost of non-compliance is rising. A compliance health check is a value-add service increasingly in demand.

Fuel Levies, Excise Duties and Carbon Tax

Not everything in this Budget was good news. Several increases were unavoidable.

Fuel levies increase in line with inflation: the general fuel levy rises by 9 cents per litre for petrol and 8 cents for diesel. The Road Accident Fund levy increases by 7 cents per litre. These increases will compound through transport and logistics costs for businesses.

Excise duties on alcohol and tobacco also increase with inflation. A 750ml bottle of spirits rises by R3.20; a pack of cigarettes rises from R22.81 to R23.58.

Carbon tax entered Phase 2 from 1 January 2026, with the rate rising from R236 to approximately R308 per tonne of CO₂e, a 30.5% increase. Businesses with meaningful emissions exposure should review their compliance frameworks now.

Social Grants: Updated Amounts for 2026

Social grants support 26.5 million South Africans. The key increases from April 2026: the Old Age, Disability and Care Dependency grants rise by R80 to R2,400; the Child Support Grant increases by R20 to R580; and the Foster Care Grant rises to R1,290 in April and R1,300 in October.

Frequently Asked Questions About the 2026 Budget Speech

The 2026 Budget brought more good news than most years, but the real opportunity for accounting firms isn't in the tax tables. It's in being the firm that helps clients understand what it means for them before they have to ask.