April payslip tax ‘boost’ may fall flat for many South Africans

If you were looking forward to a slightly healthier-looking payslip next month as a result of the 3.4% adjustment to personal income tax brackets, you might be disappointed.

The government’s adjustment was meant to ease pressure on South Africans, but rising living costs are minimising its real impact.

Medical aid increases, often climbing by 7% or more, are a major factor, and can cancel out tax savings, explains Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting SA.

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"Even though the medical aid tax credits were increased, realistically, if we look at the Discovery Medical Aid contribution, they increase from the 1st of April with most schemes increasing 7-8% monthly."

Tosen says years of limited tax bracket adjustments have also taken their toll, with so-called bracket creep steadily pushing workers into higher tax bands.

"Even individuals who were well below the tax-paying threshold and have never paid taxes have been pulled into that tax net and so are feeling the pinch."

Meanwhile, the 1 April petrol price hike is likely to further impact disposable income.

Tosen says that with employees under renewed financial pressure due to rising living costs, employers need to rethink salary strategies and introduce greater flexibility to align with workers' individual needs and realities.

To listen to Tosen in conversation with CapeTalk's Clarence Ford, use the audio player below: