The 2026 South African Budget Speech marks a stabilising moment for South Africa’s public finances, with a clear focus on fiscal discipline, infrastructure investment, and targeted household relief.

Government projects economic growth of 1.6% in 2026, improving gradually toward 2% by 2028. While growth remains moderate, debt is stabilising, the deficit is narrowing, and key structural reforms are underway.

Here’s what matters most for the average South African.

 

More Tax-Free Saving (Major Win for Investors)

One of the most significant announcements:

  • Tax-Free Savings Account (TFSA) annual limit increases from R36,000 to R46,000
  • Retirement fund deduction limit increases from R350,000 to R430,000

This materially increases how much individuals can invest tax-efficiently each year, creating greater long-term compounding potential.

 

No Broad-Based Tax Increases

Government has withdrawn the previously proposed R20 billion in tax increases due to stronger-than-expected revenue collection.

In addition:

  • Personal income tax brackets and rebates are fully adjusted for inflation, preventing bracket creep.

This protects disposable income in a constrained growth environment.

 

Sin Taxes & Fuel Levies Rise (Inflation-Linked)

Certain increases remain unavoidable.

Tobacco

  • 20-pack of cigarettes: R22.81 → R23.58

Alcohol

  • 340ml beer/cider: +8c
  • 750ml wine: +15c
  • 750ml spirits: +R3.20

Fuel Levies

  • Petrol: +9c (general levy) +5c (carbon levy) +7c (RAF)
  • Diesel: +8c +6c +7c

These will have a modest knock-on effect on transport and goods pricing.

 

Social Grants Increase

Total social grants allocation: R292.8 billion.

From April 2026:

  • Old age, disability and care dependency grants rise to R2,400 (+R80)
  • War veterans grant rises to R2,420 (+R80)
  • Foster care grant increases to R1,300 by October
  • Child support grant rises to R580 (+R20)

Social protection remains a significant component of public spending.

 

Debt Finally Stabilises

For the first time in 17 years:

  • Debt stabilises at 78.9% of GDP
  • Falls to 77.3% in 2026/27
  • Declines further to 76.5% by 2028/29

The consolidated budget deficit narrows from 4.5% to 3.1% over the medium term.

Debt-service costs are also easing, creating more fiscal space over time.

 

Over R1 Trillion for Infrastructure

Public-sector infrastructure spending will exceed R1 trillion over the medium term.

Key focus areas include:

  • Rail recovery and modernisation (PRASA)
  • Road maintenance and expansion (SANRAL)
  • Energy transmission infrastructure
  • Water supply upgrades
  • 63 public-private partnership projects in development

Infrastructure remains central to lifting long-term growth capacity.

 

Small Business Relief

  • VAT registration threshold increases from R1 million to R2.3 million
  • Capital gains tax exemption on the sale of small businesses increases from R1.8m to R2.7m
  • Applies to businesses valued up to R15m

This reduces compliance pressure and improves exit flexibility for SME owners.

 

Continued Structural Reforms

Reforms continue in:

  • Energy market liberalisation
  • Rail and port logistics access
  • Municipal financial accountability (ring-fencing water and electricity revenue)
  • Modernisation of digital payments infrastructure (PayInc)
  • Regulation of crypto assets under exchange controls

These reforms aim to strengthen efficiency, investment and accountability across the economy.

The 2026 Budget introduces targeted tax adjustments, expanded savings incentives, continued social support, and a substantial infrastructure commitment, alongside a narrowing deficit and stabilising debt trajectory.

Further details will emerge through the Division of Revenue Bill, Appropriation Bill and Budget Review documents as implementation progresses over the financial year.