South Africa: An Unbearable Tax Burden

A family man with a salary of R100,000 a month can pay up to 80% ‘tax’ in South Africa Shaun Jacobs • 29 March 2026 South Africa has one of the most heavily burdened personal income tax bases in the world, with around 2.4% of individuals paying 77% of all personal income tax. The country also has a highly progressive personal income tax system, with high-income earners making over R887,001 per year taxed at a rate of 41%. While South Africans are heavily taxed, these formal taxes do not cover the additional costs individuals pay due to the government’s failure to provide basic services. This includes education, healthcare, and security, with individuals having to pay private schools and companies to provide services that the state is meant to provide. While private education has historically been the preserve of the wealthy in South Africa, it is becoming increasingly mainstream as many state schools suffer from years of mismanagement and inadequate investment. Efficient Group chief economist Dawie Roodt has previously said that these payments, in the form of school fees, security levies, and medical aid, can be considered an additional “tax” on South Africans. In effect, in these regards, individuals are double-taxed, as they have to pay for these services out of their own pocket on top of personal income tax. MyTreasury co-founder Michael Kransdorff explained that the mismanagement of South Africa’s state-provided education, healthcare, and policing means individuals are compelled to pay for these services from private alternatives. Furthermore, the personal income tax paid by South Africans does not include the multitude of other ways the South African government taxes individuals. This includes value-added tax (VAT) on nearly all purchases, excluding VAT-exempt food items, as well as several fuel taxes levied at the pump. Individuals who save and invest in stocks, property, and other assets face several additional taxes, including a 20% flat tax on dividends and a capital gains tax. Interest earned from bank savings accounts or fixed-income investments is added to an individual’s taxable income and taxed at their marginal tax rate, with the first R23,800 being tax-free. As a result, an individual’s tax burden in South Africa is significantly greater than the headline personal income tax rate, largely due to the additional private services they have to purchase to make up for shortfalls in government-provided services. Family man earning R100,000 per month as an example To illustrate the situation, Daily Investor used the example of an individual who earns R100,000 per month, or R1.2 million a year, before tax. This income is generally considered high, and someone earning this amount is widely regarded as rich in South Africa. However, calculations show that this individual is left with significantly less spending money than typically assumed, with private-sector alternatives to state services eating up a substantial chunk of their paycheque. Most South Africans would look at the headline figure after tax, which in this case is R67,965 after the individual pays PAYE, the Skills Development Levy (SDL), and contributes to the Unemployment Insurance Fund (UIF). The individual’s UIF contribution is capped at R177.12 per month, while the SDL payment is 1% of their paycheque, R1,000. In Daily Investor’s example, the calculation continues to include medical aid payments, private school fees, an estate levy for security, property rates, and fuel levies. Daily Investor assumed the individual’s partner did not work and that they had two children. The family lives in Johannesburg. The family’s two children attend Curro Primary and Curro High School in Rivonia, with one in grade six and the other in grade ten. Their combined school fees come to R21,860 per month. Regarding medical aid, the individual has a Discovery Classic Smart Comprehensive scheme, with their partner and two children as additional dependents. This comes to an estimated R18,498 per month. The individual receives tax relief in the form of medical aid tax credits, which vary depending on excess payments. Including these payments, Daily Investor assumed tax credits of R2,749 per month. For this example, the family lives in Waterfall Country Village Estate, which includes 24/7 security. This estate has a levy of R3,610 per month. Daily Investor assumed the family would live in a R3 million house. At Johannesburg’s property rates, this equates to R2,146.25 per month as the first R300,000 is exempt. The individual pays a series of other municipal levies on their property, including refuse removal, sewage, and electricity and water tariffs. For this calculation, Daily Investor focused on the levies charged and not the total utilities bill. These levies amount to R2,908.86. Regarding fuel levies, Daily Investor assumed the individual drove a petrol-engined Toyota Hilux and filled its 80-litre tank twice a month with 93-octane petrol. Using the National Treasury’s breakdown of fuel taxes for the new financial year, which includes increases to the General Fuel Levy and Road Accident Fund Levy, the individual will pay R1,052 in fuel taxes per month. The taxes, including payments for private services to replace deteriorating public alternatives, and their impact on the individual’s income can be seen in the table below. Item Amount Gross salary R100,000.00 PAYE R30,857.75 UIF R177.12 SDL R1,000.00 Total after payroll taxes R67,965.13 Medical aid R18,498.00 Medical aid tax credits R2,749.00 Private schooling R21,860.00 Estate levy R3,610.00 Property rates R2,146.25 Refuse removal R456.00 Sewage R900.00 Electricity tariffs R1,185.00 Water tariffs R367.86 Fuel levies R1,052.00 Total remaining R20,630.00