Budget 2021/22 – Tax thresholds and seven tax brackets for individuals

Bracket creep is the phenomenon where a state collects increased revenue without making increases to the tax rate. Instead the state relies on inflation to bring more individual taxpayers into higher tax brackets, resulting in an increased revenue collection. While South African individual taxpayers have been spared an increase in tax rates in the recent past, this was based on the intention that bracket creep would provide the additional revenue required by the state.

 

The Minister has announced that the tax thresholds and seven tax brackets for individuals will be raised by 5%. The two tables below demonstrate the brackets for 2020/21 and 2021/22:

2022 tax year (1 March 2021 – 28 February 2022)

Taxable Income (R) Rates of Tax (R)
R1 – R216,200 18% of taxable income
R216,201 – R337,800 R38,916 + 26% of taxable income above R216,200
R337,801 – R467,500 R70,532 + 31% of taxable income above R337,800
R467,501 – R613,600 R110,739 + 36% of taxable income above R467,500
R613,601 – R782,200 R163,335 + 39% of taxable income above R613,600
R782,201 – R1,656,600 R229,089 + 41% of taxable income above R782,200
R1,656,601 and above R587,593 + 45% of taxable income above R1,656,600
2021 tax year (1 March 2020 – 28 February 2021)
Taxable Income (R) Rates of Tax (R)
R1 – R205,900 18% of taxable income
R205,901 – R321,600 R37,062 + 26% of taxable income above R205,900
R321,601 – R445,100 R67,144 + 31% of taxable income above R321,600
R445,101 – R584,200 R105,429 + 36% of taxable income above R445,100
R584,201 – R744,800 R155,505 + 39% of taxable income above R584,200
R744,801 – R1,577,300 R218,139 + 41% of taxable income above R744,800
R1,577,301 and above R559,464 + 45% of taxable income above R1,577,300

 

The primary, secondary and tertiary rebates will similarly increase by 5% to R14,958, R8,199 and R2,736 respectively. While the medical schemes tax credit will see an inflationary increase to R322 for the first two members and R224 for all subsequent members.

The increase in the tax brackets for individuals means there will be no bracket creep this year. The Budget projects that this will provide R2,2 billion worth of relief to individual taxpayers. On the other hand, the Budget projected that had the tax brackets not been raised, bracket creep would have resulted in an additional R11,2 billion in collected revenue. The bracket increase therefore brings a welcome outcome for all taxpayers in the wake of the COVID-19 pandemic.