PAYE, or Pay As You Earn, is income tax that your employer deducts from your salary and pays to the South African Revenue Service on your behalf.
It is not an extra tax added on top of income tax. PAYE is the system SARS uses to collect part of your personal income tax throughout the year instead of waiting for you to pay the entire amount after the tax year ends.
For the 2027 tax year, from 1 March 2026 to 28 February 2027, South Africa’s individual income-tax rates range from 18% to 45%. Your actual PAYE depends on your taxable income, age, tax rebates, allowable deductions and certain tax credits.
What does PAYE mean on your payslip?
PAYE on your payslip is the amount of employees’ tax your employer has withheld from your remuneration for that pay period.
Your employer calculates the deduction using SARS tax tables and payroll rules, deducts it from your earnings and pays it to SARS.
If your payslip shows:
- Gross salary: R30,000
- PAYE: R4,681
- Other deductions: R1,500
the PAYE portion is specifically your income-tax withholding. Other deductions such as UIF, retirement-fund contributions or medical-aid contributions are separate items.
SARS publishes monthly, weekly, fortnightly and annual tax-deduction tables that employers use for payroll calculations. The current 2027 tables took effect on 1 March 2026.
How is PAYE calculated?
PAYE starts with your expected taxable income for the tax year.
In a simple case, an employer can broadly:
- Determine your taxable remuneration.
- Convert it to an annual equivalent.
- Apply the relevant SARS income-tax brackets.
- Deduct the tax rebates you qualify for.
- Account for relevant deductions or tax credits.
- Convert the result back to the appropriate monthly, weekly or other payroll period.
Payroll software normally performs this calculation automatically.
Your payslip therefore does not simply apply one percentage to your monthly salary.
What are the tax brackets for 2026/2027?
For the tax year from 1 March 2026 to 28 February 2027, SARS applies these individual income-tax brackets:
| Taxable income per year | 2027 tax rate |
|---|---|
| R1 to R245,100 | 18% of taxable income |
| R245,101 to R383,100 | R44,118 + 26% above R245,100 |
| R383,101 to R530,200 | R79,998 + 31% above R383,100 |
| R530,201 to R695,800 | R125,599 + 36% above R530,200 |
| R695,801 to R887,000 | R185,215 + 39% above R695,800 |
| R887,001 to R1,878,600 | R259,783 + 41% above R887,000 |
| R1,878,601 and above | R666,339 + 45% above R1,878,600 |
These are marginal tax brackets. Moving into a higher bracket does not mean your entire salary is taxed at the higher percentage. Only the portion of taxable income inside that bracket is taxed at that rate.
How do tax brackets work in practice?
Suppose your taxable income is R360,000 a year.
The first R245,100 falls into the 18% bracket.
The remaining R114,900 falls into the 26% bracket.
Using the SARS formula:
R44,118 + 26% of R114,900 = R73,992
That is the tax before applying the primary rebate.
For a taxpayer under 65, the 2027 primary rebate is R17,820. After subtracting it:
R73,992 – R17,820 = R56,172
Dividing that by 12 gives approximately R4,681 per month.
This is a simplified example. Your actual payroll deduction can differ because of retirement contributions, medical-scheme tax credits, irregular income and other payroll factors.
What is the tax rebate?
A tax rebate reduces the income tax calculated using the tax brackets.
For the 2027 tax year, SARS provides:
| Rebate | Amount |
|---|---|
| Primary rebate | R17,820 |
| Secondary rebate, age 65 and older | R9,765 |
| Tertiary rebate, age 75 and older | R3,249 |
Every individual taxpayer who qualifies receives the primary rebate. Older taxpayers can receive the additional age-related rebates as well.
The rebate is one reason someone earning within the 18% tax bracket does not simply lose 18% of every rand earned to PAYE.
How much can you earn before paying income tax?
For the 2027 tax year, the tax thresholds are:
- Under 65: R99,000 per year
- 65 to under 75: R153,250 per year
- 75 and older: R171,300 per year
If you are under 65 and your taxable income for the year is below R99,000, you generally will not have an income-tax liability based solely on that income.
For someone under 65, R99,000 a year is approximately R8,250 per month.
That does not mean every person earning above R8,250 will have exactly the same PAYE deduction. Taxable remuneration and individual circumstances still matter.
How much PAYE is deducted from a R20,000 salary?
For a simplified example, assume you:
- Are younger than 65
- Earn R20,000 per month for the full year
- Have no other taxable income
- Have no retirement-fund deductions
- Have no medical tax credits or other adjustments
Annual income would be:
R20,000 × 12 = R240,000
Tax before the rebate:
18% × R240,000 = R43,200
Less the 2027 primary rebate:
R43,200 – R17,820 = R25,380
Approximate monthly tax:
R25,380 ÷ 12 = R2,115
So simplified PAYE would be around R2,115 per month.
Actual payroll PAYE can differ.
How much PAYE is deducted from a R30,000 salary?
Using the same simplified assumptions:
Annual income:
R30,000 × 12 = R360,000
Tax according to the 2027 brackets:
R44,118 + 26% × (R360,000 – R245,100)
This produces R73,992 before the primary rebate.
After the R17,820 rebate:
R56,172 per year
Approximate monthly PAYE:
R4,681
Again, this is an illustration rather than a payslip calculation for every employee.
How much PAYE is deducted from a R50,000 salary?
A monthly salary of R50,000 equals R600,000 per year before any adjustments.
Using the 2027 tax table:
R125,599 + 36% × (R600,000 – R530,200)
Tax before rebate is approximately R150,727.
After the R17,820 primary rebate, annual income tax is approximately:
R132,907
That is about R11,076 per month in this simplified example.
These calculations show why your PAYE percentage rises as your taxable income increases.
Does your entire salary get taxed at your highest tax rate?
No.
South Africa uses a progressive tax system.
If part of your income reaches the 36% tax bracket, for example, only the portion falling within that bracket is taxed at 36%.
The lower portions are still taxed using the lower applicable rates.
This distinction is important because people sometimes assume that receiving a salary increase into the next tax bracket can leave them earning less after tax.
The higher rate applies only to the additional income falling into the higher bracket.
Is PAYE calculated on gross salary?
PAYE is calculated from taxable remuneration, which is not always identical to the headline gross salary shown in an employment offer.
Certain benefits and allowances can be taxable, while qualifying deductions can reduce taxable income.
Your taxable remuneration may therefore include more than basic cash salary.
Examples can include certain:
- Bonuses
- Commissions
- Fringe benefits
- Travel allowances
- Employer-provided benefits
- Other taxable employment payments
The rules depend on the type of remuneration involved.
Do retirement contributions reduce PAYE?
Qualifying retirement-fund contributions can reduce taxable income, subject to South African tax rules and limits.
This includes qualifying contributions to pension, provident and retirement annuity funds.
If your employer processes an allowable retirement contribution through payroll, the PAYE calculation can reflect the deduction during the year.
This is one reason two employees with the same gross salary can have different PAYE deductions.
Does medical aid reduce PAYE?
Medical-scheme membership can affect your tax through medical scheme fees tax credits rather than simply deducting the full medical-aid contribution from taxable income.
Where your employer has the necessary information and the rules allow it, these credits can be reflected in payroll and reduce the amount of employees’ tax withheld.
Additional medical-expense tax credits may also apply in particular circumstances.
The treatment depends on factors such as the number of dependants, age and qualifying expenses.
Is UIF part of PAYE?
UIF and PAYE are separate deductions.
PAYE is income tax collected for SARS.
UIF is a contribution to the Unemployment Insurance Fund and operates under different legislation and contribution rules.
Both can appear on the same payslip, which sometimes creates confusion.
Your net salary may therefore be reduced by PAYE, UIF, retirement contributions and other authorised deductions at the same time.
What happens to PAYE when you receive a bonus?
A bonus is generally taxable remuneration, so PAYE can be deducted from it.
That can make the deduction on a bonus payslip look unusually high.
Payroll systems consider the employee’s taxable remuneration and applicable SARS rules when determining the employees’ tax deduction.
A larger payment can therefore result in more tax being withheld during that payroll period.
This does not necessarily mean SARS has imposed a special “bonus tax” separate from normal income tax.
Does overtime attract more tax?
Overtime forms part of employment remuneration and can increase your taxable earnings.
If additional overtime pushes your projected taxable income higher, your PAYE deduction may rise.
Again, there is no separate overtime tax rate simply because the money came from overtime.
The income forms part of your broader taxable remuneration.
Why does PAYE sometimes change from one month to another?
PAYE can change when your remuneration changes.
Common reasons include:
- Salary increases
- Bonuses
- Commission
- Overtime
- Unpaid leave
- Taxable fringe benefits
- Retirement-fund contribution changes
- Medical-scheme changes
- Payroll corrections
The start of a new tax year can also affect deductions if SARS changes tax brackets, rebates or thresholds.
For 2027, the new rates and thresholds took effect from 1 March 2026, and employers were required to update payroll systems accordingly.
Why is PAYE sometimes different between two people earning the same salary?
Gross salary alone does not determine the final deduction.
Two employees earning R40,000 per month could have different PAYE because one:
- Contributes more to a qualifying retirement fund
- Has qualifying medical tax credits
- Receives different taxable benefits
- Earns irregular commission
- Is older than 65
- Has other payroll adjustments
A difference therefore does not automatically mean that one employer has calculated PAYE incorrectly.
Does PAYE mean you do not need to submit a tax return?
Not necessarily.
PAYE being deducted does not automatically mean you never need to interact with SARS.
Your employer reports employment information to SARS, usually through an IRP5 or IT3(a) certificate, and PAYE already paid is taken into account when your final tax liability is assessed.
Whether you need to submit a return depends on SARS filing requirements and your individual tax circumstances.
You may also have income outside employment, such as rental income, investment income or freelance earnings, that changes the final position.
Can you get PAYE back from SARS?
You can receive a tax refund if the amount of tax already paid exceeds your final assessed tax liability.
For example, too much PAYE may have been withheld during the year, or deductible contributions and tax credits may reduce your final liability.
The opposite can also happen.
If insufficient tax was withheld or you have additional taxable income, an assessment could show that you owe SARS money.
PAYE is therefore best understood as tax collected in advance toward your final annual income-tax liability.
What happens to PAYE when you change jobs?
Changing employers does not restart your tax year.
Your final income tax is based on your total taxable income for the full year of assessment.
Because each employer may only have information about the remuneration it paid you, changing jobs or having more than one employer can sometimes create a difference between PAYE withheld and the final tax calculated by SARS.
Keep the tax certificates from every employer and check that your information is correctly reflected when filing or reviewing your SARS assessment.
What if you have two jobs?
Income from both jobs contributes to your overall taxable income.
Each employer may deduct PAYE based on the remuneration it pays you, but neither employer necessarily knows exactly what the other is paying.
Your combined annual income could therefore place you in a higher tax bracket than either payroll calculation anticipates individually.
This can lead to additional tax being payable when SARS assesses your total income.
People with several income sources should pay particular attention to their overall tax position.
Is PAYE the same as provisional tax?
No.
PAYE is generally deducted by an employer from employment remuneration.
Provisional tax is a payment system mainly relevant to people who receive income that is not fully subject to PAYE, such as certain self-employed people or taxpayers with other taxable income.
SARS explains that provisional tax payments and any PAYE already withheld during the year are both credited against the taxpayer’s eventual normal tax liability.
Provisional tax is also not a separate type of tax. It is another method of paying income tax during the year.
Where can you check whether your PAYE is correct?
Start with your payslip.
Compare:
- Gross remuneration
- Taxable benefits
- Retirement deductions
- PAYE
- UIF
- Other deductions
Your IRP5 should also show the employment income and employees’ tax reported to SARS for the relevant tax year.
SARS publishes official tax deduction tables for employers, including monthly tables, which can be used to understand the calculation.
If something appears incorrect, payroll or your employer’s HR department is usually the first place to ask for an explanation.
What should you understand about PAYE?
PAYE is simply the mechanism used to collect your employment income tax throughout the year.
The amount is determined using your taxable remuneration and the applicable SARS rules, not by applying one flat percentage to everyone’s salary.
For the 2027 tax year, income-tax rates start at 18% and rise to 45%, but tax rebates and thresholds mean the final amount you pay can be considerably different from simply multiplying your salary by your highest tax rate.
Understanding PAYE makes it easier to read your payslip, compare job offers and understand the difference between your gross salary and the amount that actually reaches your bank account.
