Minister of Finance Enoch Godongwana on Wednesday delivered a budget that is set to have a significant impact on the wallets
Image: Supplied
Minister of Finance Enoch Godongwana on Wednesday delivered a budget that is set to have a significant impact on the wallets of ordinary South Africans.
The budget also included adjustments to personal income tax brackets and medical tax credits to account for inflation. It also introduced increases in fuel levies and excise duties on alcohol, tobacco, and vaping products.
Personal income tax brackets and rebates have been increased by 3.4%, with the lowest bracket now covering R0–R245,100, up from R0–R237,100 last year. Higher brackets have also been raised, with top earners paying 45% on income above R1,878,601.
Minister of Finance Enoch Godongwana on Wednesday delivered a budget that is set to have a significant impact on the wallets
Image: National Treasury
Under the new thresholds, those earning a monthly income of R8,250 or less won’t pay income tax. Someone earning R300,000 a year will stay in the 26% bracket rather than being pushed into a higher one, meaning more take-home pay.
Introducing the tax adjustments, Godongwana said the changes were intended to ease the financial burden on households and businesses.
“We are also proposing additional tax measures to ease the financial burden on households and businesses, by adjusting personal income tax brackets and rebates fully in line with inflation.”
Graham Molyneux, a partner at an accounting firm, said that in recent years, personal incomes rising with inflation were often pushed into higher tax brackets.
"In recent years, the National Treasury increased personal income tax revenue by not adjusting tax brackets in line with inflation, a phenomenon known as 'bracket creep'. As personal incomes typically rose with inflation, taxpayers were pushed into higher tax brackets, resulting in additional tax being collected," Molyneux said.
Molyneux added that in yesterday’s Budget, National Treasury adjusted the tax brackets to keep pace with inflation, providing relief for individual taxpayers.
"In yesterday’s Budget, however, National Treasury adjusted the tax brackets to keep pace with inflation. This comes as significant relief for individual taxpayers".
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