PAYE Calculator South Africa (2026)
PAYE (Pay As You Earn) is the system by which employers deduct income tax from employees' salaries before paying them. Understanding how PAYE is calculated helps you understand your payslip, plan your finances, and ensure accurate tax deductions. This comprehensive 2026 guide covers everything you need to know about PAYE calculations in South Africa.
What Is PAYE?
Understanding PAYE
PAYE (Pay As You Earn) is:
Definition:
- A system of income tax collection
- Deducted by employers from employee salaries
- Based on estimated annual income
- Paid to SARS monthly by employers
- Helps spread tax payments throughout the year
Key Features:
- Automatic deduction from salary
- Based on annual income projection
- Adjusted for tax rebates and credits
- Includes UIF and SDL where applicable
- Finalized when you file your tax return
Who Pays PAYE?
Employees:
- All employees earning above the tax threshold
- Subject to PAYE deductions
- Deducted automatically by employer
- Shown on payslip
Employers:
- Responsible for calculating PAYE
- Must deduct and pay to SARS
- Submit monthly returns
- Issue IRP5 certificates
How PAYE Is Calculated
Basic Calculation Method
Step 1: Determine Annual Income
- Monthly salary × 12
- Include bonuses, allowances
- Project annual earnings
- Account for salary increases
Step 2: Apply Tax Brackets
- Use current tax brackets
- Calculate annual tax liability
- Apply progressive rates
- Account for rebates
Step 3: Calculate Monthly PAYE
- Annual tax ÷ 12
- Monthly deduction amount
- Adjusted for actual earnings
- May vary month to month
Factors Affecting PAYE
Income Level:
- Higher income = higher PAYE
- Progressive tax system
- Marginal tax rates apply
- Effective rate varies
Tax Rebates:
- Primary rebate reduces PAYE
- Age rebates for seniors
- Medical tax credits
- Applied automatically
Deductions:
- Retirement fund contributions
- Medical aid contributions
- Other allowable deductions
- Reduce taxable income
Using PAYE Calculators
SARS eFiling Calculator
Features:
- Official SARS calculator
- Based on current tax tables
- Accurate calculations
- Free to use
How to Use:
- Log in to eFiling
- Navigate to tax calculator
- Enter your salary details
- View calculated PAYE
- Compare to actual deduction
Online PAYE Calculators
Third-Party Calculators:
- Various online calculators available
- Verify accuracy
- Check current tax rates
- Use as estimate only
Important:
- Always verify with official sources
- Check calculator uses current rates
- Understand limitations
- Consult professional if needed
Manual Calculation
Step-by-Step:
Example: Monthly Salary R30,000
-
Annual Income:
-
Calculate Annual Tax:
- First R237,100: R237,100 × 18% = R42,678
- Next R122,900: R122,900 × 26% = R31,954
- Total: R42,678 + R31,954 = R74,632
-
Apply Rebates:
- Primary rebate: R17,235
- Net tax: R74,632 - R17,235 = R57,397
-
Monthly PAYE:
Note: This is simplified. Actual calculations include medical credits, UIF, SDL, and other factors.
Understanding Your Payslip
PAYE Deduction
What You'll See:
- PAYE amount deducted
- Based on monthly salary
- May vary with bonuses
- Shown as separate line item
Verification:
- Check calculation is correct
- Compare to tax tables
- Understand variations
- Keep payslips for records
Other Deductions
UIF (Unemployment Insurance Fund):
- 1% of salary (employee contribution)
- Capped at maximum
- Separate from PAYE
- Shown on payslip
SDL (Skills Development Levy):
- Employer pays (not employee)
- 1% of payroll
- Not deducted from salary
- Employer responsibility
Medical Aid:
- Employee contribution
- Employer may contribute
- Reduces taxable income
- Shown on payslip
Retirement Fund:
- Employee contribution
- May be tax-deductible
- Reduces taxable income
- Shown on payslip
PAYE vs. Final Tax Liability
Understanding the Difference
PAYE:
- Estimated tax during the year
- Based on projected income
- May over- or under-estimate
- Adjusted at year-end
Final Tax:
- Actual tax liability
- Calculated when filing return
- Based on actual income
- Includes all income sources
Reconciliation:
- Compare PAYE paid to final tax
- Determine refund or payment
- File return to finalize
- Receive refund or pay balance
When PAYE Is Too High
Causes:
- Multiple jobs (each deducts PAYE)
- Bonuses increase monthly deduction
- Incorrect tax code
- Over-estimation of annual income
Result:
- Overpayment of tax
- Refund when filing return
- Can be significant amount
- Processed after return assessment
When PAYE Is Too Low
Causes:
- Additional income not subject to PAYE
- Under-estimation of income
- Incorrect deductions
- Multiple income sources
Result:
- Underpayment of tax
- Balance due when filing return
- May incur penalties if significant
- Must pay balance by due date
Special PAYE Scenarios
Multiple Jobs
Challenges:
- Each employer deducts PAYE
- May result in overpayment
- Both use full rebates
- Can be complex
Solutions:
- Inform employers of multiple jobs
- May adjust one employer's deduction
- Reconcile at year-end
- File return to finalize
Bonuses and Overtime
Impact:
- Increase monthly income
- Higher PAYE deduction that month
- Based on higher monthly rate
- May over-estimate annual tax
Considerations:
- Understand calculation method
- May get refund at year-end
- Keep records of all income
- File return accurately
Salary Increases
During Tax Year:
- PAYE recalculated
- Based on new salary
- May catch up on underpayment
- Adjusted monthly deduction
Considerations:
- Understand impact on PAYE
- May affect year-end position
- Keep records of changes
- File return accurately
PAYE and Tax Returns
IRP5 Certificate
What It Shows:
- Total salary for year
- Total PAYE deducted
- Other deductions
- Taxable benefits
Importance:
- Required for tax return
- Shows PAYE paid
- Used for reconciliation
- Keep for records
Filing Your Return
Process:
- Use IRP5 information
- Include all income
- Calculate final tax
- Reconcile with PAYE
Outcome:
- Refund if overpaid
- Payment if underpaid
- Nil if correct
- Final tax position
Common PAYE Questions
Why Does My PAYE Vary?
PAYE can vary due to:
- Bonuses or overtime
- Salary changes
- Tax table updates
- Calculation adjustments
Can I Reduce My PAYE?
You can reduce PAYE by:
- Increasing retirement contributions
- Claiming medical expenses
- Legitimate tax planning
- Understanding deductions
What If My Employer Doesn't Deduct PAYE?
If your employer doesn't deduct PAYE:
- You're still liable for tax
- Must pay via provisional tax
- May face penalties
- Contact SARS for guidance
How Do I Verify My PAYE Is Correct?
Verify PAYE by:
- Using SARS calculator
- Comparing to tax tables
- Checking payslip calculations
- Consulting tax practitioner
Conclusion
Understanding PAYE calculations is essential for every South African employee. By knowing how PAYE works, how it's calculated, and how it relates to your final tax liability, you can better understand your payslip, plan your finances, and ensure accurate tax compliance. Remember that PAYE is an estimate, and your final tax position is determined when you file your annual tax return.
For accurate calculations, always use official SARS resources or consult a qualified tax practitioner.
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Official Resources:
