Question 1

What is the Employment Tax Incentive (ETI)?

Accepted Answer

The ETI is a government incentive that encourages employers to hire young workers aged 18 to 29. It works by reducing the amount of PAYE tax the employer must pay to SARS, effectively lowering the cost of employing young people. The incentive can be up to R1,500 per month per qualifying employee in the first 12 months, and up to R750 per month in months 13 to 24.

Question 2

How do I claim the ETI?

Accepted Answer

The ETI is claimed by reducing the PAYE amount on your monthly EMP201 return submitted to SARS. There is no separate application form. Simply calculate the ETI for each qualifying employee and deduct it from your total PAYE liability. If the ETI exceeds your PAYE liability, the excess is carried forward. Ensure each qualifying employee has valid identification (South African ID, asylum seeker permit, or an ID issued under the Refugee Act).

Question 3

What if the employee earns R7,500 or more per month?

Accepted Answer

If the employee earns R7,500 or more per month, no ETI is available for that employee. The ceiling rose from R6,500 to R7,500 with effect from 1 April 2025, so employees earning between R6,500 and R7,499.99 do now qualify — many payroll systems and online calculators were slow to update this. Between R5,500 and R7,499.99 the incentive tapers down to zero rather than stopping abruptly.

Question 4

How much is the ETI in 2026?

Accepted Answer

For remuneration below R2,500 per month the incentive is 60% of remuneration in the first 12 months (30% in months 13 to 24). From R2,500 to R5,499.99 it is a flat R1,500 per month (R750 in months 13 to 24). From R5,500 to R7,499.99 it tapers: R1,500 less 75% of the amount above R5,500 (or R750 less 37.5% in months 13 to 24). These amounts have applied since 1 April 2025.

Question 5

Does the employee have to earn at least the minimum wage?

Accepted Answer

Yes. If a wage regulating measure such as a bargaining council agreement or sectoral determination applies, the employee must be paid at least that amount. If none applies, the employee must be paid at least R2 500 for 160 ordinary hours in the month, pro-rated if they work fewer hours. Paying below the applicable minimum disqualifies the employee entirely, and the national minimum wage of R30.23 per hour also applies in its own right.

Question 6

What happens after 24 months of employment?

Accepted Answer

The ETI is only available for the first 24 months of employment. After the employee has been employed for 24 months, no further incentive can be claimed for that specific employee. However, you can claim ETI for new qualifying employees you hire.

Question 7

Does the ETI reduce the employee's salary?

Accepted Answer

No, the ETI does not reduce the employee's salary in any way. The employee receives their full remuneration as agreed. The incentive only reduces the employer's PAYE liability to SARS. It is a benefit to the employer, not a deduction from the employee's pay.

Question 8

Does an employee need a South African ID to qualify for ETI?

Accepted Answer

Yes. A qualifying employee must have a valid South African ID, an asylum seeker permit, or an ID issued in terms of the Refugee Act. Employers should retain supporting records before claiming ETI.

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ETI is claimed on your monthly EMP201 return.

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ETI by Salary Level

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ETI is claimed on your monthly EMP201 return.

Important Disclaimer

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