Fiscal position & credibility
- Public debt stabilises for the first time in 17 years and begins to decline over the medium term.
- Budget deficit narrows to 4.5% of GDP in 2025/26 and continues falling thereafter.
- South Africa has:
- Been removed from the FATF grey list,
- Secured its first credit‑rating upgrade in 16 years, and
- Benefited from lower borrowing costs.
Economic outlook & growth strategy
- Economic growth improves to 1.6% in 2026, rising to about 2% by 2028.
- Growth strategy built on four pillars:
- Macroeconomic stability
- Structural reforms
- Infrastructure investment
- Improved state capacity
- Strong focus on energy, logistics, water, and housing reforms to remove structural bottlenecks.
No new major tax increases
- R20 billion in planned tax increases withdrawn due to improved revenue performance.
- Budget prioritises growth and relief over higher taxes.
Relief for households
- Full inflation adjustment to:
- Personal income tax brackets
- Rebates
- Medical tax credits
- Increased incentives for saving:
- Tax‑free investment limit raised to R46 000 per year
- Retirement deduction cap raised to R430 000
Strong support for small businesses
- VAT compulsory registration threshold increased from R1 million to R2.3 million.
- Turnover tax limit increased to R2.3 million.
- Capital gains tax relief improved for small‑business owners, especially on retirement or sale of a business.
Fuel, carbon tax & excise duties
- Fuel levy increases in line with inflation, not above it.
- Carbon fuel levy increased, consistent with existing carbon tax legislation.
- Alcohol and tobacco excise duties increased by inflation (including vaping products).
Spending priorities
- Total government spending: R2.67 trillion in 2026/27.
- Over 60% of non‑interest spending goes to the social wage.
- Social grants increased across categories.
- Increased funding for:
- Health (including HIV/AIDS programmes),
- Education (especially early childhood development),
- Peace, security, and border management.
Infrastructure investment
- Over R1 trillion allocated to public‑sector infrastructure over the medium term.
- Focus areas:
- Transport and logistics (roads, rail, ports),
- Energy transmission and generation,
- Water infrastructure.
- Public‑private partnerships (PPPs) actively promoted.
Governance, savings & reform
- R12 billion in targeted savings identified by cutting inefficiencies.
- Strong stance against illicit trade, especially in tobacco.
- Reforms announced for:
- Financial sector regulation,
- Crypto asset oversight,
- Payments modernisation,
- Local government financial management.
Overall message of the Budget Speech
The 2026 Budget marks a turning point.
It emphasises:
- Restored fiscal credibility
- Stability instead of tax hikes
- Targeted relief for households and SMEs
- Infrastructure‑led growth and reform