How PAYE is worked out on your payslip
PAYE (Pay-As-You-Earn) is the income tax your employer takes off your salary every month and pays to SARS for you. Here is how the amount on your payslip is worked out, using a R25 000 monthly salary in the 2026/27 tax year as an example.
The five steps
- Work out your yearly income. R25 000 × 12 = R300 000.
- Take off retirement contributions. Pension, provident fund and retirement annuity contributions come off first, up to 27.5% of your income. In this example there are none, so taxable income stays R300 000.
- Apply the tax brackets. Tax on the first R245 100 is R44 118. The R54 900 above that is taxed at 26%, which is R14 274. Total: R58 392.
- Subtract your rebate. Everyone gets the primary rebate of R17 820. R58 392 − R17 820 = R40 572 for the year.
- Divide by 12. R40 572 ÷ 12 = R3 381 PAYE a month.
UIF comes off separately: 1% of your salary, so R250 in this example, but capped at R177.12 a month. That leaves a take-home pay of R21 441.88.
The 2026/27 tax brackets
Each slice of your income is taxed at its own rate. Moving into a higher bracket only affects the rands above the line, not your whole salary.
| Taxable income a year | Tax |
|---|---|
| R1 – R245 100 | 18% of taxable income |
| R245 101 – R383 100 | R44 118 + 26% above R245 100 |
| R383 101 – R530 200 | R79 998 + 31% above R383 100 |
| R530 201 – R695 800 | R125 599 + 36% above R530 200 |
| R695 801 – R887 000 | R185 215 + 39% above R695 800 |
| R887 001 – R1 878 600 | R259 783 + 41% above R887 000 |
| R1 878 601 and above | R666 339 + 45% above R1 878 600 |
Rebates and tax-free amounts
| Age | Rebate | No tax on income up to |
|---|---|---|
| Under 65 | R17 820 | R99 000 |
| 65 to 74 | R27 585 | R153 250 |
| 75 and older | R30 834 | R171 300 |
Medical aid tax credits
If you belong to a medical scheme, you get a credit of R376 a month for yourself and R376 for your first dependant, plus R254 for each extra dependant. The credit comes straight off your tax.
How saving for retirement cuts your tax
Say you put R2 000 a month into a retirement annuity. That is R24 000 a year off your taxable income. At a 26% marginal rate, your tax drops by about R6 240 a year, or R520 a month. So R2 000 of saving only costs you about R1 480 in take-home pay.
Why your payslip might be different
- Bonuses, commission and overtime are taxed when they are paid, which can push up PAYE that month.
- Travel allowances, company cars and other fringe benefits add to your taxable income.
- Some employers round figures differently or spread tax over the year.
Source: SARS rates of tax for individuals, 2027 tax year (1 March 2026 to 28 February 2027). This guide is general information, not tax advice.