Pay-As-You-Earn (PAYE) is the system through which SARS collects income tax from salaried employees in South Africa. Your employer deducts tax from your salary each month and pays it directly to SARS on your behalf. Understanding how PAYE works helps you verify that the right amount is being deducted and plan your finances accordingly.
How PAYE Works
When you receive your salary, your employer calculates the tax due based on SARS tax tables and deducts it before paying you. This includes income tax, UIF contributions, and any other statutory deductions. The amount deducted depends on your annual equivalent salary, your age, and any tax directives that apply to your situation.
Your employer uses either the annual tax tables or the monthly tax deduction tables published by SARS to determine the correct PAYE amount. The annual equivalent method annualises your monthly salary, calculates the annual tax, and then divides by 12 to get the monthly deduction.
Income Tax Brackets for 2024/2025
South Africa uses a progressive tax system with seven tax brackets for the 2024/2025 tax year (1 March 2024 to 28 February 2025):
- R0 to R237,100: 18% of taxable income
- R237,101 to R370,500: R42,678 + 26% of the amount above R237,100
- R370,501 to R512,800: R77,362 + 31% of the amount above R370,500
- R512,801 to R673,000: R121,475 + 36% of the amount above R512,800
- R673,001 to R857,900: R179,147 + 39% of the amount above R673,000
- R857,901 to R1,817,000: R251,258 + 41% of the amount above R857,900
- Above R1,817,000: R644,489 + 45% of the amount above R1,817,000
Tax Rebates
Every taxpayer receives rebates that reduce the tax payable. For 2024/2025:
- Primary rebate (all taxpayers): R17,235
- Secondary rebate (age 65 and older): R9,444
- Tertiary rebate (age 75 and older): R3,145
The primary rebate effectively creates a tax-free threshold of R95,750 for taxpayers under 65. If your taxable income is below this threshold, you owe no income tax.
Tax Thresholds
Thanks to the rebates, you do not need to pay tax if your taxable income falls below these thresholds:
- Under 65: R95,750
- Age 65 to 74: R148,217
- Age 75 and older: R165,689
Common PAYE Deductions
Your payslip typically shows several deductions beyond income tax:
- UIF (Unemployment Insurance Fund): 1% of your salary, capped at R177.12 per month. Your employer matches this contribution.
- Retirement fund contributions: If your employer offers a pension or provident fund, your contribution is deducted before tax (up to 27.5% of remuneration, max R350,000 per year).
- Medical aid: While not tax-deductible at source, medical aid tax credits reduce your overall tax liability.
What to Do If Your PAYE Seems Wrong
If you believe your employer is deducting too much or too little tax, start by checking your IRP5 certificate at the end of the tax year. You can also use our South Africa salary calculator to verify what your deductions should be. If there is a discrepancy, raise it with your employer's payroll department or consult SARS directly.
Filing Your Annual Tax Return
Even though your employer deducts PAYE throughout the year, you may still need to file an annual income tax return (ITR12) with SARS. This is required if you have income from more than one source, earn above certain thresholds, or want to claim additional deductions such as medical expenses or retirement fund contributions. SARS will reconcile what was paid through PAYE against your actual tax liability, resulting in either a refund or an additional payment.
Use our free salary calculator to see exactly how much tax you should be paying on your South African salary.