PAYE in South Africa — the complete 2026/27 guide
PAYE (Pay As You Earn) is the monthly income tax South African employers must withhold from every employee's remuneration and pay to SARS. It is calculated using the SARS tax tables for the current tax year (1 March – 28 February), less the primary, secondary and tertiary rebates.
Payroll Africa Editorial · SARS Payroll Compliance Team
The Payroll Africa editorial team is composed of registered tax practitioners, payroll administrators and BCEA specialists who maintain the SARS PAYE, UIF, SDL and ETI engines that power the platform. Every article is reviewed against the current SARS BRS and Basic Conditions of Employment Act before publication.
- SARS registered tax practitioners
- SAPA-affiliated payroll administrators
- BCEA and LRA compliance reviewers
Last updated 30 Sept 2026
What is PAYE?
PAYE is a system of monthly income-tax collection created by the Fourth Schedule to the Income Tax Act. Every registered employer must deduct PAYE from any remuneration that exceeds the annual tax threshold and remit it to SARS by the 7th of the following month via the EMP201 return.
PAYE is not a separate tax — it is a monthly instalment on the employee's annual income tax liability. At year-end, the total PAYE withheld appears on the IRP5 (source code 4102) and pre-populates the employee's ITR12 personal tax return.
2026/27 SARS tax tables
SARS publishes tax tables in the annual Budget Speech. The 2026/27 brackets (unchanged from 2026/27) are:
- R0 – R245,100 → 18%
- 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+ → R666,339 + 45% above R1,878,600
PAYE rebates and thresholds (2026/27)
After applying the sliding scale, SARS subtracts an age-based rebate — everyone gets the primary rebate; those 65+ get an additional secondary rebate; those 75+ a further tertiary rebate.
- Primary rebate (all ages): R17,820
- Secondary rebate (65+): +R9,765
- Tertiary rebate (75+): +R3,249
- Tax threshold under 65: R99,000
- Tax threshold 65–74: R153,250
- Tax threshold 75+: R171,300
How to calculate PAYE — worked example
Example: an employee earns R25,000 per month (annual R300,000), aged 40.
Step 1 — annualised income: R300,000. Step 2 — bracket: R245,101–R383,100 → R44,118 + 26% × (R300,000 − R245,100) = R44,118 + R14,274 = R58,392 annual tax. Step 3 — apply primary rebate: R58,392 − R17,820 = R40,572 annual PAYE. Step 4 — divide by 12: R3,381.00 PAYE per month.
Common PAYE mistakes
The three mistakes that cause most PAYE disputes with SARS at year-end reconciliation:
- Failing to gross-up fringe benefits before applying the tax tables
- Deducting medical scheme fees tax credit twice (once via payroll, again on ITR12)
- Applying the wrong rebate when an employee turns 65 or 75 mid-year
- Forgetting to withhold PAYE on annual bonuses using the annualisation method
- Using outdated tax tables after the March 1 rate change
Frequently asked questions
Related guides
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