BUDGET 2026 HIGHLIGHTS

Budget 2026 has a clear emphasis on supporting economic growth while maintaining fiscal consolidation, and should leave consumers and investors reasonably satisfied. The country’s debt path continues to stabilise, and the growth outlook is slowly improving, despite persistent domestic and global risks.

The withdrawal of the proposed R20bn tax increase, bolstered by stronger-than-expected revenue, means no additional tax burden, while for the first time in two years, relief from bracket creep was introduced, combined with higher medical aid tax credits, which offer welcome support to households.

“Sin” taxes were broadly aligned with inflation, while the fuel levy rises by 9c/l and the RAF levy by 7c/l, which are both below inflation.

The tax-free savings account limit rises to R46,000, and the retirement annuity deduction cap increases to R430,000.

There’s good news for small businesses – the VAT compulsory registration threshold and the annual turnover limit for the turnover tax were both raised from R1m to R2.3m, and the voluntary VAT registration threshold from R50,000 to R120,000. These VAT registration thresholds will become effective on 1 April, while the other thresholds will be effective from 1 March. Turnover tax relief for micro businesses has been expanded, with the tax-free threshold nearly doubling to R600,000, up from R335,000.

The budget also includes measures to support older South Africans who have dedicated their lives to building enterprises. The increase in the capital gains tax exemption for the sale of a small business from R1.8m to R2.7m is a welcome step. By also expanding the eligibility threshold for this exemption to businesses worth up to R15m (increased from R10m), the government is enabling more founders to unlock capital that can be reinvested into the economy.

LEGAL