The 2027 National Budget, tabled by Finance Minister Enoch Godongwana, places strong emphasis on fiscal discipline while offering targeted relief to households and small businesses. Tax and VAT adjustments form the backbone of this year’s proposals, reflecting government’s intent to balance revenue needs with economic support.
💰 Personal Income Tax
- Inflationary relief restored: After two years without bracket adjustments, personal income tax tables are now fully aligned with inflation, protecting households from bracket creep.
- Medical tax credits: Increased to ease the rising cost of healthcare.
- Thresholds adjusted: Tax thresholds and limits updated to shield lower- and middle-income earners.
🏢 Corporate & Business Tax
- Small business relief:
- VAT registration thresholds raised, reducing compliance burdens for micro and small enterprises.
- Turnover-tax regimes adjusted to encourage entrepreneurship and growth.
- Savings incentives: The annual contribution limit for tax-free savings accounts (TFSA) has been increased to R46,000, encouraging both household and business savings.
📊 VAT & Indirect Taxes
- VAT collections: Projected to remain a major revenue driver, exceeding R520 billion in 2026/27.
- No VAT rate increase: Government has opted against raising the standard VAT rate, focusing instead on compliance and efficiency improvements.
- Excise duties: Adjusted in line with inflation, maintaining revenue stability without introducing sharp increases.
🌍 Revenue Outlook
- Revenue outperformance: Collections exceeded forecasts by R21.3 billion in 2025/26, easing pressure for new tax hikes.
- Tax-to-GDP ratio: Strengthened to 25.9%, reflecting improved compliance and modest economic recovery.
✨ Key Takeaway
Budget 2027’s tax and VAT measures are designed to protect households, support small businesses, and encourage savings, while keeping the overall tax burden stable. The absence of major rate hikes signals government’s commitment to fiscal discipline without stifling growth.
For taxpayers, the message is clear: incremental relief, steady compliance, and a focus on sustainability.