What is PAYE?
PAYE (Pay As You Earn) is how South Africa collects income tax from employees. Your employer deducts it from your salary every month and pays it to SARS on your behalf. Here's exactly how it works.
What is PAYE?
PAYE (Pay As You Earn) is South Africa's system for collecting income tax from employees. Your employer deducts PAYE from your salary each month using SARS progressive tax brackets (18%–45%) and pays it to SARS on your behalf. It applies to any employee earning above R99,000 per year.
✓ Fact-checkedUpdated 1 May 2026Sources: Income Tax Act s7·SARS 2026/27 tax tablesMethodology
Key takeaways
- ✓PAYE (Pay As You Earn) is income tax deducted monthly by your employer and paid directly to SARS on your behalf.
- ✓It is calculated using SARS progressive tax brackets — the more you earn, the higher your marginal rate (18%–45%).
- ✓Your primary rebate (R17,235 for under-65s in 2026/27) is deducted from your tax, not your income.
- ✓You do not need to file a tax return if PAYE is your only income and your employer deducts the correct amount.
Definition
PAYE is South Africa's system for collecting income tax monthly from employees' salaries. Your employer calculates and deducts it before paying your net salary.
How PAYE is calculated
PAYE is calculated by annualising your monthly gross salary (×12), applying SARS's progressive tax brackets (18%–45%), subtracting your annual primary rebate (R17,235 for under-65s in 2026/27), and dividing the result by 12 to get your monthly deduction. Retirement fund contributions reduce your taxable income before the brackets are applied, which lowers your PAYE bill.
The calculation uses your taxable income — gross salary minus allowable deductions (pension, retirement annuity, etc.). Here are the steps:
Annualise your monthly income
Multiply your gross monthly salary by 12 to get an annual figure. SARS tax brackets are based on annual income.
Subtract allowable deductions
Deduct pension/provident fund contributions (up to 27.5% of income, max R350,000/year) and retirement annuity contributions.
Apply the tax bracket
Look up your taxable income in the SARS tax table. Progressive rates from 18% (on income up to R245,900/year) to 45% (above R1,878,600/year).
Subtract the primary rebate
Reduce the annual tax by the primary rebate of R 17 820/year. This effectively means no tax is payable below R99,000/year.
Apply medical aid tax credits
Subtract R376/month (R4,512/year) for the main member, and R254/month per additional member. This directly reduces your tax, not just your taxable income.
Divide by 12
Divide the resulting annual tax by 12 to get your monthly PAYE deduction.
What does PAYE look like on a real payslip?
PAYE appears as a deduction on your payslip each month. On a R30,000 gross salary it is by far the largest single line item — roughly 18% of gross before any retirement fund deductions.
RAND SOLUTIONS (PTY) LTD
Reg No: 2019/123456/07 · VAT No: 4510234567
12 Sandton Drive, Sandton, 2196
Payslip
Pay Period: December 2025
Tax Year: 2025/2026
| Description | Current (R) | |
|---|---|---|
| Earnings | ||
| Basic Salary | 30 000,00 | |
| Total Earnings | 30 000,00 | |
| Deductions | ||
| PAYE Income Tax¹ | (5 390,00) | |
| UIF — Employee Contribution² | (177,00) | |
| Total Deductions | (5 567,00) | |
Net Pay
R 24 433,00
| Employer Contributions (for reference) | ||
| UIF — Employer Contribution | 177,00 | |
¹ PAYE — Calculated on taxable income using SARS 2025/2026 progressive tax brackets (18%–45%). Employer remits monthly to SARS via PAYE201 return.
² UIF — Unemployment Insurance Fund. Employee pays 1% of gross; employer contributes a matching 1%. Capped at R177.12/month per the R17,712 earnings ceiling. Registered under UIF Act, 2001.
Illustrative example only · R30,000 gross · No pension or medical aid · 2025/26 tax year
Calculate yours →2026/2027 PAYE tax brackets
South Africa uses a progressive system with seven brackets — the rate shown applies only to income within that band, not to all your earnings. Most employees earning R200,000–R600,000 a year pay an effective rate of 18–26%, well below the marginal rate, once rebates and retirement fund deductions are factored in.
| Annual taxable income | Rate |
|---|---|
| R 0 – R 245 900 | 18% |
| R 245 901 – R 383 200 | 26% |
| R 383 201 – R 527 900 | 31% |
| R 527 901 – R 694 300 | 36% |
| R 694 301 – R 880 100 | 39% |
| R 880 101 – R 1 878 600 | 41% |
| R 1 878 601 and above | 45% |
Data: Income Tax Act 58 of 1962 · SARS 2026/27 tax tables · See methodology
Calculate your exact PAYE deduction
Enter your gross monthly salary to see your PAYE, UIF, and take-home pay.
Frequently asked questions
What does PAYE stand for?
PAYE stands for Pay As You Earn. It is the system used in South Africa (and many other countries) to collect income tax from employees on a monthly basis, rather than in a single lump sum at year-end. Your employer deducts PAYE from your gross salary each month and pays it directly to SARS.
Who pays PAYE in South Africa?
Any South African employee who earns above the annual tax threshold must have PAYE deducted. For the 2026/2027 tax year, the threshold is R99,000/year (R8,250/month) for taxpayers under 65. If you earn below this amount, you pay no income tax and your employer should not deduct PAYE.
How does my employer know how much PAYE to deduct?
Your employer uses SARS's PAYE calculation tables (published each February after the Budget Speech) together with information you provide on your IRP5 / payroll record — including your tax number, medical aid contributions, and retirement fund deductions — to calculate your monthly PAYE.
Can I get a PAYE refund?
Yes. If your employer over-deducted PAYE during the tax year (for example, because you had deductible expenses, medical aid credits, or a disability), SARS will refund the overpayment after you submit your annual tax return. SARS typically processes refunds within 21 business days of a completed return.
How can I reduce my PAYE?
You can legally reduce your PAYE through: contributing to a pension, provident fund, or retirement annuity (up to 27.5% of income, max R350,000/year is deductible); claiming medical aid tax credits (R376/month for main member, R254/month per additional member); and claiming qualifying disability or home office expenses on your annual return.
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