Budget 2026: Can the revenue boost bring some tax relief for households?

South Africans may be spared major new tax shocks in this week’s Budget Speech, with stronger-than-expected revenue collections giving Treasury slightly more breathing room than previously feared. However, competing demands from the health, property and clean energy sectors are intensifying as Finance Minister Enoch Godongwana prepares to table the 2026 Budget.

Economist Dawie Roodt said the Budget is likely to be “a little bit less bad” than anticipated, largely due to what he described as an overrun in state revenue collections driven by high commodity prices and improved tax compliance.

“Collections are doing better than expected, largely because of high commodity prices like gold and platinum,” Roodt said. “Those sectors are paying more tax, which is helping quite a bit.”

He also credited the South African Revenue Service with stronger enforcement and compliance measures, saying the agency appears to be limiting leakages and improving overall revenue performance. As a result, he said revenue numbers remain buoyant and more sustainable than previously projected, even though the fiscal deficit is still expected to be sizeable.

“The deficit still looks quite large, but it does seem to be moving in the right direction,” he said.

For households, the key question is whether Treasury will introduce new personal income tax hikes. Roodt said he believes that is unlikely.

“There will be increases in taxes on things like alcohol and cigarettes,” he said. “But a major tax increase — especially on personal income tax — is very, very unlikely.”

He added that there may be limited relief through adjustments to personal income tax brackets, given what he described as slightly improved fiscal space. While conditions remain tight, they are “a little bit less severe than we thought previously,” he said.

Corporate income tax revenue is also expected to remain relatively firm, supported by commodity prices and stronger compliance, according to Roodt. However, he cautioned that improved revenue performance does not resolve South Africa’s structural economic challenges.

“The bigger issue remains the lack of economic growth, and that is likely to persist,” he said.

Infrastructure spending is expected to increase or at least remain steady, with greater emphasis on addressing structural bottlenecks in the economy. But overall expenditure remains elevated.

“The real problem is that expenditure is still too high — largely because of political pressure on finances, especially around public services and related spending,” Roodt said.

At the same time, several sectors have publicly called on Treasury to use the Budget to provide clarity and relief.

The Board of Healthcare Funders has urged Godongwana to provide policy certainty that medical scheme tax credits will be retained and adjusted at least in line with inflation. The organisation said the credits have not been increased since the 2022/23 tax year, while medical scheme contributions have risen above inflation over the same period.

The BHF says nearly nine million South Africans are covered by medical schemes, with 67% classified as low- and middle-income earners. It warned that eliminating or failing to adjust the credits could push between 430,000 and 690,000 members out of cover due to affordability pressures.

“Medical tax credits are not a subsidy for the wealthy, they are a lifeline for ordinary South Africans to keep quality healthcare within reach,” said BHF managing director Dr Katlego Mothudi. He said failing to adjust the credits in line with inflation would increase the financial burden on households and could destabilise medical scheme risk pools while National Health Insurance reforms are still being phased in.

In the energy and transport sector, Zero Carbon Charge (CHARGE) has called for reform of electric vehicle import duties and the removal of the ad valorem tax on EVs, arguing that policy signals should support both production and adoption. CHARGE cited data from Naamsa showing that hybrid and electric passenger vehicle sales rose 8.1% year-on-year in the first ten months of 2025 to 13,358 units, with market share at 3.8%.

The organisation has also called for clearer tax treatment and funding support to accelerate the rollout of off-grid, solar-powered EV charging infrastructure.

Meanwhile, Samuel Seeff, chairman of the Seeff Property Group, has urged Treasury to avoid personal and corporate tax increases and bracket creep, and to consider raising the transfer duty exemption threshold. He said improved economic fundamentals, including lower inflation and a stronger rand, provide an opportunity to stimulate growth.

Taken together, the submissions highlight the delicate balancing act facing Treasury. While stronger revenue collections may soften the tone of this year’s fiscal plan, demands for tax relief, infrastructure investment and sustained social spending remain significant.

Whether improved revenue performance translates into meaningful relief for households — or is absorbed by ongoing expenditure pressures — will become clearer when Godongwana delivers the Budget on Wednesday.

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