How PAYE Tax Works in South Africa
PAYE stands for Pay As You Earn. It is the tax your employer takes from your salary every month and pays to SARS for you. You do not have to do anything — it happens automatically.
Key Takeaways
- PAYE is income tax that your employer deducts from your salary each month
- The more you earn, the higher your tax rate (18% to 45%)
- If you earn less than R95,750 per year, you pay no tax at all
- UIF (1% of salary) is also deducted every month
- Retirement fund contributions can reduce your tax
What is PAYE?
PAYE is the system SARS uses to collect income tax. Your employer works out how much tax you owe each month. They take it from your salary before paying you. Then they send that money to SARS.
- PAYE = Pay As You Earn
- Your employer handles everything for you
- The tax goes straight to SARS each month
How much tax do you pay?
South Africa uses a sliding scale. This means the more you earn, the more tax you pay. But you only pay the higher rate on the part of your income that falls in that bracket — not on everything.
- 18% on the first R237,100 you earn per year
- 26% on the next portion (R237,101 to R370,500)
- 31% on R370,501 to R512,800
- It goes up to 45% for income over R1,817,000
What is the tax-free amount?
Everyone gets a tax rebate (a discount on tax). For people under 65, this means you pay no tax if you earn less than R95,750 per year (about R7,979 per month). If you are 65 or older, the threshold is higher.
- Under 65: No tax on first R95,750 per year
- 65 to 74: No tax on first R148,217 per year
- 75 and older: No tax on first R165,689 per year
What about UIF?
UIF stands for Unemployment Insurance Fund. Your employer deducts 1% of your salary for UIF. They also pay an extra 1% on top. This money helps you if you lose your job, go on maternity leave, or get sick for a long time.
- You pay 1% of your salary
- Your employer pays another 1%
- Maximum salary for UIF calculation is R17,712 per month
- UIF helps with unemployment, maternity, and illness
Ready to see your own numbers?
Use the PAYE Calculator