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How-To Guide

How to Calculate PAYE in South Africa

Learn how to calculate PAYE tax for employees using SARS tax tables. Step-by-step guide with examples and current tax brackets.

Updated 1 March 2025·3 min read·7 steps

Step-by-Step Guide

1

Determine the employee's gross remuneration

Add up all taxable income: basic salary, overtime, commission, bonuses, allowances, and fringe benefits. This is the gross monthly remuneration before any deductions.

2

Annualise the income

Multiply the monthly gross by 12 to get the annual equivalent. For irregular income (bonuses), add it to the annual projection. This annualised figure is used for the tax bracket lookup.

3

Subtract allowable deductions

Deduct retirement fund contributions (pension, provident, RA) up to 27.5% of the greater of remuneration or taxable income, capped at R350,000 per year. This gives you the taxable income.

4

Apply the SARS tax brackets

Look up the taxable income in the SARS progressive tax table. Calculate: base amount + marginal rate × (taxable income - bracket threshold). For 2025/2026, brackets range from 18% (R0-R237,100) to 45% (above R1,817,000).

5

Subtract rebates

Subtract the age-based rebate: R17,235 (under 65), R26,679 (65-74), or R29,824 (75+). The rebate directly reduces the tax amount.

6

Subtract medical tax credits

Subtract Section 6A medical aid credits: R364/month for the first two members, R246 for each additional dependant. Multiply by 12 for the annual credit.

7

Calculate monthly PAYE

Divide the annual tax liability by 12. This is the monthly PAYE to deduct from the employee's salary. The employer must pay this to SARS by the 7th of the following month via EMP201.

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Frequently Asked Questions

What is PAYE in South Africa?
PAYE (Pay As You Earn) is income tax that employers deduct from employees' salaries and pay to SARS on their behalf each month.
How do I calculate PAYE manually?
Annualise gross salary, subtract pension deductions, apply SARS tax brackets, subtract rebates and medical credits, then divide by 12.
What are the PAYE tax brackets for 2025/2026?
The brackets range from 18% (R0-R237,100) to 45% (over R1,817,000), with 7 brackets in total.
When must PAYE be paid to SARS?
Monthly PAYE payments via EMP201 are due by the 7th of the month following the payroll period.

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