PAYE Tax Calculator

How SARS Turns Your Salary Into Take-Home Pay

PAYE stands for Pay As You Earn. It is not a separate tax in itself; it is simply the mechanism your employer uses to deduct income tax from each payslip and hand it to SARS on your behalf, so you do not face one large bill at the end of the tax year. The number this calculator produces follows the exact sequence SARS uses: it works out your annual taxable income, applies the sliding-scale tax brackets, subtracts the rebates and medical credits you qualify for, then divides what is left across twelve months. Understanding that order is the difference between guessing at your salary and actually knowing why a R5,000 raise might only add R3,000 to your bank account.

South Africa uses a marginal, not a flat, tax system

The single most common misconception is that moving into a higher tax bracket taxes your whole salary at the higher rate. It does not. Only the slice of income that falls inside each bracket is taxed at that bracket rate. The structure SARS publishes each year looks like this (confirm the exact figures for the current tax year on sars.gov.za, as the thresholds are adjusted in most annual budgets):

Your marginal rate is the rate on your last rand earned (the band you top out in). Your effective rate is the total tax divided by your gross income, which is always lower because the earlier slices were taxed more gently. The calculator shows both so you can see the gap.

Rebates and the tax threshold

After the brackets give a raw tax figure, SARS subtracts rebates that everyone receives. The primary rebate (roughly R17,820) applies to all taxpayers. A secondary rebate (around R9,765) is added once you turn 65, and a tertiary rebate (around R3,249) once you turn 75. These rebates are the reason there is a tax threshold: a person under 65 only starts paying income tax once their taxable income passes about R99,000 a year, because below that the rebate fully cancels the tax owed. This is also why the calculator asks for your age rather than just your salary.

A worked example: R420,000 a year

Say you earn R420,000 annually, are under 65, and make no retirement contribution. The tax is built band by band:

First R245,100      x 18%  = R44,118
Next  R138,000      x 26%  = R35,880   (245,100 -> 383,100)
Next  R36,900       x 31%  = R11,439   (383,100 -> 420,000)
                            ----------
Raw annual tax              = R91,437
Less primary rebate         - R17,820
                            ----------
Annual tax payable          = R73,617
Monthly PAYE (/ 12)         = R6,135 (approx)

Notice the marginal rate here is 31% (the top band reached), but the effective rate is only about 17.5% of gross. That gap is exactly why a bonus feels like it is "taxed heavily": a once-off bonus is added on top of your income and taxed at your marginal rate, not your effective one.

Retirement contributions, medical credits and UIF

Three other inputs shift your result. Contributions to a pension, provident or retirement annuity fund are deducted from your income before tax is calculated, up to 27.5% of the greater of taxable income or remuneration (capped annually). That is why putting an extra R1,000 a month into a retirement annuity costs you less than R1,000 in take-home pay. Medical aid contributions instead give a fixed monthly tax credit (around R376 for the main member, R376 for the first dependant, then about R254 for each additional dependant) that is subtracted after the brackets. UIF is separate from income tax altogether: it is 1% of your salary deducted by your employer (who matches it), capped at a monthly ceiling of R177.12.

Questions people actually ask

• Does a raise ever leave me worse off? No. Because only the slice in the higher band is taxed more, you always keep more rand after a raise, just not the full amount.
• Why is my bonus taxed so much? It is added to your annual income and the whole bonus typically falls in your top (marginal) band. It only feels heavy because the rest of your salary enjoys the lower bands.
• Is this the same as my IRP5? The estimate should be close to the PAYE shown on your IRP5/payslip, but your employer may apply travel allowances, lump sums or directives this tool does not model.
• Are the figures guaranteed? No. SARS adjusts brackets, rebates and thresholds in most budgets. Treat this as a planning estimate and confirm the current tax year figures on sars.gov.za.