Gross pay is not the number to budget around
The figure in your employment contract is not the figure that lands in your account. Between gross pay and take-home pay sit at least two compulsory deductions, PAYE and UIF, often alongside a pension or medical aid contribution. Budgeting off your gross salary is one of the fastest ways to end up short every month, because you are planning around money that was never going to reach you.
The fix is not complicated, but it does mean knowing what each line does, and which ones you can actually influence.
PAYE: your income tax, collected monthly
Pay-As-You-Earn is your annual income tax liability collected in monthly instalments by your employer on SARS's behalf, instead of you settling it in one lump the following year. For the 2027 tax year, which runs from 1 March 2026 to 28 February 2027, the brackets are:
- 18% of taxable income up to R245,100
- R44,118 plus 26% of the amount above R245,100, up to R383,100
- R79,998 plus 31% above R383,100, up to R530,200
- R125,599 plus 36% above R530,200, up to R695,800
- R185,215 plus 39% above R695,800, up to R887,000
- R259,783 plus 41% above R887,000, up to R1,878,600
- R666,339 plus 45% above R1,878,600
The rebate comes off the tax, not off your income. This one trips up a lot of people. SARS works out the tax on your taxable income first, and only then subtracts the primary rebate of R17,820 from that tax figure. You can prove it from the threshold: R99,000 taxed at 18% is exactly R17,820, which is precisely why R99,000 is the point below which someone under 65 pays no income tax at all. If you are 65 or older a further R9,765 rebate applies, lifting the threshold to R153,250, and from 75 another R3,249 lifts it to R171,300.
Because the brackets are marginal, moving into a higher one never reduces your take-home pay. Only the slice of income sitting inside the higher bracket is taxed at that rate. Turning down a raise to avoid tax is always the wrong call: you keep less of the extra than you might like, but you still keep more than you had before.
UIF, and the levy that is not yours to pay
The Unemployment Insurance Fund deduction is 1% of your monthly remuneration, matched by another 1% from your employer. It is calculated only on earnings up to a monthly ceiling of R17,712, so the most anyone contributes is R177.12 a month, no matter how much they earn. Worth knowing: that ceiling has been unchanged since 1 June 2021, so it has not kept pace with salaries, and it caps the benefit you can claim just as it caps the contribution.
Unlike PAYE, UIF buys you something specific. It funds a claim if you are retrenched, go on maternity leave, or cannot work because of illness.
You may also see a Skills Development Levy line on the payslip. That is 1% of payroll, paid by employers whose annual payroll exceeds R500,000, and by law it cannot be recovered from your salary. If SDL is reducing your net pay, that is a payroll error, not a tax you owe.
The credits that quietly reduce your PAYE
Two items lower your tax rather than your pay, and both are easy to miss.
If you belong to a medical scheme, the medical scheme fees tax credit is subtracted directly from your PAYE every month. For the 2027 tax year it is R376 for the main member, another R376 for the first dependant, and R254 for each additional dependant. It is a flat rand amount whatever plan you are on, which means it covers a far bigger share of a cheap plan than an expensive one. Our guide to choosing between medical aid and a hospital plan works through that trade-off.
Retirement fund contributions made through your employer reduce the income your PAYE is calculated on, which is why a pension deduction costs you less in take-home terms than its rand value suggests. The deduction is limited to 27.5% of the greater of your remuneration or taxable income, capped at R430,000 for the 2027 tax year.
Why a bonus month looks brutal
A widely repeated belief is that bonus months are over-taxed and the excess comes back at year end. That is usually not what is happening.
SARS allows employers two methods for taxing an annual payment such as a thirteenth cheque: annualising the expected total remuneration including the bonus, or the balance-of-remuneration method, which calculates the tax on your salary alone, then on salary plus bonus, and charges the difference. Both exist precisely to prevent an artificially inflated deduction in the bonus month. Neither one pretends you will receive that bonus every month.
What is actually going on is that the bonus is taxed at your marginal rate, the rate applying to your top slice of income, while your normal monthly PAYE reflects a much lower average rate. On a R400,000 salary the effective rate after the rebate is roughly 17%, while the marginal rate is 31%. A bonus taxed at 31% is always going to look punitive next to that. If payroll applied either method correctly, there is nothing sitting at SARS waiting to be refunded, so plan around the net figure rather than the gross bonus.
How to check your own payslip
- Confirm UIF stops rising once your monthly earnings pass R17,712. If the deduction keeps climbing past R177.12, the ceiling is not configured.
- Check that any retirement fund contribution is reducing the income PAYE is worked out on, rather than being taken off after tax was already calculated.
- If you are on a medical scheme, make sure the tax credit is actually being applied each month. Some employers only apply it for dependants they have been told about.
- Confirm no Skills Development Levy is coming out of your pay.
- Compare your PAYE against a SARS-aligned calculator. A persistent, unexplained gap is worth raising with payroll before it runs a full tax year.
- When your IRP5 arrives, check its totals against your own payslips before you file. The IRP5 is what SARS sees.
Several of these are the same items people forget at filing time, which we cover in tax deductions you are probably missing.
Quick answers
Why did my PAYE jump the month I got a bonus?
Because the bonus is taxed at your marginal rate, which is higher than the average rate your normal salary attracts. Provided your employer used one of the two SARS-approved methods, that is the correct amount, not an overpayment that gets refunded later.
Does the primary rebate reduce my taxable income?
No. The tax is calculated on your full taxable income first, and the R17,820 rebate is then subtracted from the tax owed. That is exactly why the threshold for someone under 65 is R99,000: R17,820 divided by 18%.
Can I get my UIF contributions back if I never claim?
No. UIF is insurance, not savings. Contributions are not refundable, and benefits are payable only on qualifying events such as retrenchment, maternity leave or illness.
Budgeting off the number that actually arrives
Once you know what each deduction is doing, the practical step is to build the budget on net pay instead of the contract figure. In Budget Hub you enter income as what actually reaches your account, with separate lines for salary, rental and investment income, so the budget works off a real number rather than a gross one that never existed. It is a living figure rather than a month-by-month ledger: when your package changes, your medical aid contribution moves or a raise finally lands, you update it once and everything downstream reflects the new reality.
A pay-yourself-first budget only works if the pay it starts from is the pay you actually receive. That is the whole reason it is worth reading your payslip properly at least once.