Understanding the 2026 tax changes

The 2026/27 personal income-tax brackets and rebates were adjusted by 3.4% for inflation, the first inflationary adjustment since the 2023/24 tax year. For taxpayers under 65, the tax threshold increased to R99 000.

For businesses, these changes matter most where owners, directors and employees receive remuneration. Payroll calculations, remuneration planning and provisional-tax estimates should reflect the current tax year rather than relying on prior-year assumptions.

The change may look modest in isolation, but using outdated tables can create avoidable differences between tax deducted during the year and the final liability assessed later.

One of the most significant changes for smaller businesses is the increase in the compulsory VAT registration threshold from R1 million to R2.3 million in annual taxable supplies from 1 April 2026. The voluntary-registration threshold also increased from R50 000 to R120 000.

SARS is administering registration and deregistration requests using the higher thresholds. Businesses below the new compulsory threshold should nevertheless avoid treating deregistration as an automatic decision.

A VAT decision can affect pricing, input-tax recovery, customers, administration and cash flow. The right response depends on the nature of the business rather than the threshold alone.

The turnover-tax regime for qualifying micro-businesses was also expanded. The annual turnover limit increased from R1 million to R2.3 million, while the tax-free turnover band increased to R600 000.

Turnover tax is designed as a simplified system for qualifying micro-businesses, but eligibility and suitability still need to be considered carefully. A lower administrative burden does not automatically make it the best option for every business.

Owners should compare the effect of the regime with the business’s actual margins, structure, growth plans and VAT position before making a change.

The standard corporate income-tax rate remains 27% for years of assessment ending from 1 April 2026 to 31 March 2027.

Small Business Corporations continue to use graduated rates where the relevant requirements are met. For the current period, the first R99 000 of taxable income is taxed at 0%, followed by graduated bands before the 27% rate applies above the upper threshold.

The important word is qualifying. SBC treatment is not available simply because a company is small. Ownership, gross-income and activity requirements still need to be satisfied. Businesses should confirm their status before relying on preferential rates in forecasts or provisional-tax calculations.

The 2026/27 PAYE deduction tables took effect from 1 March 2026. Employers should therefore ensure that payroll systems and calculations use the current tables and rebates.

This is also a useful point in the year to review the wider tax position rather than focusing on one rate or threshold in isolation.

• Has the business’s VAT registration position changed under the new threshold?
• Could turnover tax now be relevant, and would it actually suit the business?
• Is payroll using the 2026/27 PAYE tables and current employee information?
• Do provisional-tax forecasts still reflect expected taxable income?
• Does the company qualify for the tax treatment being used?
• Are accounting records and supporting documents complete enough to support returns and calculations?

The objective is not to change something simply because a threshold moved. It is to confirm that the business’s tax position still matches its current size, structure and circumstances.