What does the 2023 Budget mean for your finances?

Laura du Preez | 22 February 2023

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses. 

There are some small concessions in this year’s Budget for South Africans feeling a financial squeeze.

Income tax rates and brackets stay steady along with fuel levies, but you may get some tax relief if you put up solar panels.

There will be no change in individual income tax rates in the coming tax year, and bracket creep has been addressed with a 4.9% increase in the tax brackets at which the increases apply.

This means a salary increase at the current inflation rate of 4.9% should not result in you being put into a higher tax bracket and paying a higher percentage of your income in tax.

The relief will mainly benefit middle-income households, the Budget Review notes.

Lower income earners under the age of 65 will be able to earn R95 750 a year (around R7 979 a month) and those over the age of 65 can earn R148 217 a year (around R12 351 a month) before they will be liable for tax. If you are over 75, it’s R165 689 a year (or around R13 807 a month).

This means if your salary went up by 4.9% this year, you will be paying tax at the same average rate in the coming tax year as you were last year. Read more: How do the income tax brackets work and what is my marginal tax rate? The new tax tables are available here: Tax tables

If the brackets had not increased, taxpayers would have been paying an additional R15.7 billion in tax in the year ahead.

Fuel levies held  

In addition, Finance Minister Enoch Godongwana announced that there will be no increase in the general fuel levy and the Road Accident Fund levy this year which will save consumers some R4 billion in the tax year ahead.

Petrol and diesel prices remain high as a result of a steep increase in the price of fuel globally following the Russian invasion of the Ukraine. Unleaded petrol in inland areas remained above R20 a litre for most of last year, affecting increasing transport, food and many other goods and services, the Budget Review notes.

Solar panels

The Budget Review announces that if you, as an individual, install rooftop solar panels over the next year, you can claim 25% of what you spend, up to R15 000, against your tax as a rebate in the tax year ahead.

The Review states that you cannot claim a tax rebate for inverters or batteries and the panels must be installed in your private residence.

Chris Axelson, chief director of economic tax analysis at National Treasury, says the rebate is only for one year to encourage people to act quickly to invest in solar and ease loadshedding.

He says the rebate is based on the amount you spend on solar panels, and the 25% is the same for everyone to ensure it is not regressive.

Franz Tomasek, head of Legislative Policy Tax, Customs and Excise at the South African Revenue Service, says draft legislation enabling the rebate will be published with an annual bill amending the Income Tax Act and will need to be approved by parliament before it becomes effective.

Medical scheme rebates

If you are a medical scheme member, the rebate you can deduct for contributions has increased to a maximum of R364 a month for the first two members (up 4.9% from R347), and to R246 a month (up 5.1% from R234) for any other dependents you have registered on your scheme.  

Transfer duty

If you are buying a home, apartment or land, there is some relief on transfer duty costs with a 10% increase in the value of the property that is not taxed and the tax brackets that apply above the new tax free amount of R1.1 million that will apply from March 1 this year. See the new rates in our Tax tables


Retirement fund tax relief

If you are retiring after March this year and taking a lump sum withdrawal, you may enjoy an additional R50 000 tax free. The tax-free amount has been increased by 10% from R500 000 to R550 000.

Withdrawals from your retirement fund will also enjoy an additional R2 500 tax free – the tax-free amount increases by 10% R25 000 to R27 500.

The tax brackets for taxes that apply to your lump sum thereafter have also been increased by 10%.

The amount you enjoy tax free is limited to the amount you can take as a lump sum. Pension fund and retirement annuity members can only take one third of their savings at retirement – the balance must be used to buy a monthly pension (annuity).

Social grants up

If you or a family member receive a grant for the aged, the disabled and for child care dependency, it will increase by R100 a month from R1 985 to R2 085 a month – an increase of 5%.

Grants for those over 75 and war veterans also increase by R100  – or 4.9% - to R2 105 a month.

Child support grants increase by R25 or 4.9% to R505 a month.

No relief for smokers and drinkers

If you are a smoker or enjoy alcohol, there is no relief. Excise duties or sin taxes will increase by 4.9% and 40% of the price of your favourite tipple will be made up tax, the Budget Review notes.

Beer will go up 10c per 340 ml can, a regular bottle of wine will go up 18c per 750 ml and a pack of 20 cigarettes will go up by 98c on April 1 this year.

What stays the same for now

Many taxes were left unchanged:

  • Estate duty remains at 20% on dutiable estates up to R30 million and 25% of the value of estate above R30 million. The estate duty abatement or exemption remains R3.5 million.
  • Donations tax remains at 20% on taxable donations up to R30 million and 25% of donations over R30 million. The first R100 000 of property donated is exempt from donations tax.

  • The capital gains tax annual exemption remains R40 000 and the exemption in the year of death remains R300 000. The inclusion rate for individuals remains 40% making the maximum effective rate for those on the highest marginal tax rate 18%.

  • Dividends tax remains 20%.

  • The interest exemptions remain at R23 800 for individuals under the age 65 and R34 500 for those over the age of 65.