Budget 2026: Finance Minister Announces Key Tax Changes to Support Households and Small Businesses
- Finance Minister Enoch Godongwana announced an inflation-linked tax relief for personal income taxpayers in the 2026 National Budget
- The minister expects duties on tobacco and alcohol to rise in line with inflation
- Small business relief includes an increased capital gains tax exemption and a higher turnover tax threshold
Justin Williams, a journalist at Briefly News since 2024, covers South Africa’s current affairs. Before joining Briefly News, he served as a writer and chief editor at Right for Education Africa’s South African chapter.
Source: Getty Images
WESTERN CAPE, CAPE TOWN - Finance Minister Enoch Godongwana has announced inflation-linked tax relief for personal income taxpayers, alongside increases in so-called "sin" taxes and fuel levies in the 2026 National Budget.
Tax relief for personal income taxpayers
Presenting the Budget in Parliament on Wednesday, 25 February 2026, Godongwana said personal income tax brackets and rebates would be fully adjusted in line with inflation, currently at 3.5%, to prevent bracket creep. He indicated that the government was proposing additional tax measures to ease financial pressure on households and businesses by ensuring tax tables keep pace with inflation. National Treasury said the adjustment would help protect disposable income at a time when many households remain financially constrained.
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The government also proposed enhancing tax-advantaged savings incentives. The annual tax-free investment contribution limit will increase from R36,000 to R46,000, while the cap on retirement fund deductions will rise from R350,000 to R430,000. Godongwana said increases to certain taxes were unavoidable. Tobacco excise duties will rise in line with inflation in 2026/27, including taxes on electronic nicotine and non-nicotine delivery systems. The duty on a pack of 20 cigarettes will increase from R22.81 to R23.58. Pipe tobacco will rise by 28 cents per 25 grams, cigarette tobacco by 87 cents per 50 grams and cigars by R4.56 per 23 grams.
Source: Getty Images
Small businesses will receive some relief
Excise duties on alcoholic beverages will also increase in line with inflation. A 340ml can of beer or cider will rise by 8 cents, a 750ml bottle of wine by 15 cents and a 750ml bottle of spirits by R3.20. Fuel-related taxes will climb as well. The general fuel levy will increase by 9 cents per litre for petrol and 8 cents for diesel. The carbon-fuel levy will go up by 5 cents per litre for petrol and 6 cents for diesel, while the Road Accident Fund levy will increase by 7 cents per litre.
Small businesses will receive some relief. Godongwana said the turnover tax registration threshold would be raised to R2.3 million, following a request from a small business owner. He also announced that the capital gains tax exemption for the sale of a small business by older persons would increase from R1.8 million to R2.7 million, and would apply to businesses valued at up to R15 million instead of the previous R10 million threshold.
Will higher alcohol taxes push South Africans to the black market?
Briefly News also reported that South Africans are waiting for the 2026 Budget Speech as fears grow that excise tax on spirits could rise above R100 per bottle.
Industry players warn that an above-inflation hike by Finance Minister Enoch Godongwana could push more consumers toward the illicit market.
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Source: Briefly News
