Retirement Tax Calculator South Africa (2026/2027)
Calculate retirement contribution deductions and lump sum tax.
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Last reviewed: Tax year: 2026/2027Source: SARS — Retirement fund lump sum benefits
Read the guide: How Much Do You Need to Retire in South Africa? Probably More Than You Think
Lump Sum Tax
Retirement Lump Sum Brackets 2026/2027
| Lump Sum Amount | Rate of Tax |
|---|---|
| R0 – R550 000 | No tax |
| R550 000 – R770 000 | 18% of amount above R550 000 |
| R770 000 – R1 155 000 | R39 600 + 27% of amount above R770 000 |
| R1 155 000 – and above | R143 550 + 36% of amount above R1 155 000 |
Withdrawal Lump Sum Brackets 2026/2027
| Lump Sum Amount | Rate of Tax |
|---|---|
| R0 – R27 500 | No tax |
| R27 500 – R726 000 | 18% of amount above R27 500 |
| R726 000 – R1 089 000 | R125 730 + 27% of amount above R726 000 |
| R1 089 000 – and above | R223 740 + 36% of amount above R1 089 000 |
The retirement tax deal, briefly
Money you put into a registered retirement fund in South Africa — pension fund, provident fund, or retirement annuity (RA) — is tax-deductible up to a cap. That means you pay no income tax on the amount contributed, which can cut your tax bill significantly. The fund itself grows tax-free (no dividends tax, no CGT, no income tax on interest). The trade-off is that withdrawals and retirement lump sums get taxed at special rates.
For 2026/2027, the deduction cap is 27.5% of your remuneration or taxable income (whichever is greater), up to R430,000 per year. Budget 2026 raised the cap from R350,000 (effective 1 March 2026) — the first increase since 2016. Contributions above the cap are not lost: excess amounts roll over to the next tax year.
Subject to legislation. National Treasury’s Budget Review 2026 gives 1 March 2026 as the effective date for the higher retirement deduction cap. It was announced in the Budget and is subject to Parliament’s legislative process, and we have not confirmed that the law has been enacted. Check SARS for the latest.
How the 27.5% rule works
The 27.5% limit is applied to the greater of your remuneration (gross salary before deductions) or your taxable income (after other deductions). For most employees this just means 27.5% of their gross annual package, capped at R430,000.
| Your remuneration | Maximum deductible |
|---|---|
| R300,000 | R82,500 (27.5%) |
| R600,000 | R165,000 (27.5%) |
| R1,000,000 | R275,000 (27.5%) |
| R1,563,637 or more | R430,000 (cap reached) |
Anything contributed above the cap in a given year isn’t deductible that year, but it’s remembered: it carries forward and offsets tax in future years (or reduces the taxable portion of your retirement lump sum when you eventually withdraw).
Worked examples — contribution tax savings
R500,000 salary, R40,000/year RA contribution
Under 65, 31% marginal income tax rate.
- Salary
- R500,000
- 27.5% of salary
- R137,500 (well above contribution)
- RA contribution (fully deductible)
- R40,000
- Tax saving at 31%
- R12,400
R1,500,000 salary, R450,000/year into an RA
Higher earner at 41% marginal rate. Contribution above the 27.5% limit.
- Salary
- R1,500,000
- 27.5% of salary
- R412,500 (limit)
- Hard cap
- R430,000
- Deductible this year (lower of the two)
- R412,500
- Carried forward to next year
- R37,500
- Tax saving this year at 41%
- R169,125
The two-pot retirement system (from Sep 2024)
Contributions made on or after 1 September 2024 split into two components inside your fund:
- Savings pot (1/3) — accessible before retirement (from the first 12-month anniversary of contributions). Withdrawals are taxed at your marginal income tax rate, not the concessionary retirement lump-sum table.
- Retirement pot (2/3) — locked until retirement. At retirement, either annuitised or up to 1/3 taken as a lump sum (depending on fund rules).
- Vested pot — everything accrued before 1 September 2024 keeps its original rules (up to 1/3 lump sum at retirement, the rest annuitised for pension funds; full access for provident fund members 55+).
Savings-pot withdrawals during your working years are a convenience, but they’re taxed aggressively — a R50,000 withdrawal at a 36% marginal rate costs you R18,000 in tax plus the permanent loss of compounding on that R50k for the rest of your working life. Use sparingly.
Retirement lump-sum tax tables (2026/2027)
At retirement (age 55+), you can take up to one-third of your fund as a lump sum. The first R550,000 is taxed at 0%. Above that, the table:
| Lump sum | Rate |
|---|---|
| R0 – R550,000 | 0% |
| R550,001 – R770,000 | 18% of amount above R550,000 |
| R770,001 – R1,155,000 | R39,600 + 27% of amount above R770,000 |
| R1,155,001 and above | R143,550 + 36% of amount above R1,155,000 |
Withdrawals before retirement (resignation, emigration) use a separate, less generous table — only the first R27,500 is tax-free.
| Withdrawal | Rate |
|---|---|
| R0 – R27,500 | 0% |
| R27,501 – R726,000 | 18% of amount above R27,500 |
| R726,001 – R1,089,000 | R125,730 + 27% of amount above R726,000 |
| R1,089,001 and above | R223,740 + 36% of amount above R1,089,000 |
Pension vs provident vs RA — practical differences
- Pension fund — employer-sponsored. Up to 1/3 cash lump sum at retirement, 2/3 annuitised.
- Provident fund — employer-sponsored. Since 1 March 2021, new contributions follow pension-fund rules (1/3 lump sum cap). Balances accrued before that date (“vested benefit”) keep full-lump-sum rights.
- Retirement annuity (RA) — personal, independent of your employer. Same tax deduction. Cannot be accessed before 55 (except in narrow cases: emigration, permanent disability, or small-balance rule under R15,000).
For the tax deduction, all three count toward the same 27.5% / R430k cap. Contributing to both an RA and an employer pension doesn’t let you double-dip.
How this calculator works
Enter your taxable income and your RA / pension contribution, and the calculator shows the maximum deductible contribution (27.5% capped at R430k), the portion that gets deducted this year, any excess that carries forward, and the immediate tax saving at your marginal rate.
The calculator also supports lump-sum estimates: enter the lump sum amount and indicate whether it’s a retirement or pre-retirement withdrawal, and the 2026/2027 tax table is applied.
Sources
Frequently Asked Questions
You can deduct up to 27.5% of the greater of your remuneration or taxable income, subject to an annual cap of R430,000. Subject to legislation: National Treasury’s Budget Review 2026 gives 1 March 2026 as the effective date for the higher retirement deduction cap. It was announced in the Budget and is subject to Parliament’s legislative process, and we have not confirmed that the law has been enacted. Check SARS for the latest.
At retirement, the first R550,000 is tax-free (cumulative across all lump sums received since 1 October 2007). Amounts above that are taxed at 18%, 27%, or 36% depending on the bracket. Pre-retirement withdrawals have a lower tax-free threshold of R27,500.
A retirement lump sum is received when you retire, are retrenched, or become disabled. A withdrawal lump sum is taken before retirement (e.g., when resigning). Retirement and retrenchment lump sums have a higher tax-free amount (R550,000) and more favourable brackets than withdrawal lump sums (R27,500 tax-free).