2025 Budget Speech 2.0 | How it affects you and your business

Finance Minister Enoch Godongwana’s 2025 Budget proposes several key tax and fiscal changes that will directly impact individuals and businesses. The most notable change is the phased increase in VAT, with a 0.5 percentage point hike planned to take effect on 1 May 2025 and another on 1 April 2026, increasing the VAT rate from the current 15% to 16% over two years. To mitigate the impact on lower-income households, the basket of VAT zero-rated food items will be expanded to include additional essential goods.

For individual taxpayers, there is no inflation adjustment to personal income tax brackets for the second consecutive year, leading to bracket creep as salary increases push individuals into higher tax brackets. Medical tax credits also remain unchanged.

Property buyers will benefit from an upward adjustment of 10% in transfer duty brackets from 1 April. Meanwhile, social grant recipients will see above-inflation increases, and the Covid-relief Social Relief of Distress grant has been extended until March 2026.

Government has unexpectedly opted not to increase fuel levies for the fourth consecutive year, while excise duties on alcohol and tobacco will rise above inflation, and the carbon tax on fuel and diesel will also increase.

With likely parliamentary opposition to some of the proposals, particularly the VAT hike, stand by for further changes!

SARS has also just released their “Budget 2025 Tax Pocket Guide” which provides a useful summary of the tax tables and their impact on taxpayers.