How do I calculate PAYE for employees in South Africa?
# How to Calculate PAYE for Employees in South Africa
**PAYE (Pay As You Earn) is calculated using SARS progressive tax brackets ranging from 18% to 45%**, applied to an employee's monthly taxable income after deductions. The calculation uses official SARS monthly tax tables that factor in annual tax thresholds.
## Current PAYE Tax Brackets (2025/2026 Tax Year)
The progressive tax rates for the 2025/2026 tax year are:
- **R0 - R237,100**: 18% of taxable income
- **R237,101 - R370,500**: R42,678 + 26% of income above R237,100
- **R370,501 - R512,800**: R77,362 + 31% of income above R370,500
- **R512,801 - R673,000**: R121,475 + 36% of income above R512,800
- **R673,001 - R857,900**: R179,147 + 39% of income above R673,000
- **R857,901 - R1,817,000**: R251,258 + 41% of income above R857,900
- **R1,817,001 and above**: R644,489 + 45% of income above R1,817,000
## Tax Thresholds (No Tax Payable Below These Amounts)
- **Under 65 years**: R95,750 annually
- **65-74 years**: R148,217 annually
- **75+ years**: R165,689 annually
## Step-by-Step PAYE Calculation
### 1. Determine Gross Monthly Income
Start with the employee's total monthly salary, including:
- Basic salary
- Allowances (car, travel, etc.)
- Bonuses and commissions
- Fringe benefits (taxable portion)
### 2. Calculate Monthly Taxable Income
Subtract allowable deductions from gross income:
- **Retirement fund contributions** (up to 27.5% of income, max R350,000 annually)
- **Medical aid contributions** (employee portion)
- **Travel allowances** (non-taxable portion per SARS rates)
### 3. Apply SARS Monthly Tax Tables
Use the official SARS monthly tax deduction tables that convert annual brackets to monthly calculations. These tables automatically account for tax thresholds and progressive rates.
### 4. Add Medical Aid Tax Credits
Apply monthly medical aid tax credits:
- **R347** for main member
- **R347** for first dependant
- **R234** for additional dependants
## Practical Example
**Employee earning R25,000 monthly:**
1. Annual equivalent: R25,000 × 12 = R300,000
2. Applicable rate: 18% + 26% (falls in second bracket)
3. Monthly PAYE: Approximately R3,150 (using SARS tables)
4. Less medical aid credits if applicable
## Important Considerations
- **Use official SARS tables**: Never calculate manually—use the monthly tax deduction tables provided by SARS
- **Update annually**: Tax brackets and thresholds change each tax year
- **Consider all deductions**: Missing retirement or medical aid deductions results in over-taxation
- **Fringe benefits**: Include the taxable value of company cars, loans, and other benefits
## Compliance Requirements
Submit monthly **EMP201 returns** by the 7th of the following month, including:
- Total PAYE deducted
- UIF contributions (1% employee, 1% employer, max R177.12 monthly)
- Skills Development Levy (1% of payroll if annual payroll exceeds R500,000)
**WeekdayApp automates PAYE calculations and SARS deadline tracking** for accounting practices, ensuring accurate deductions and timely submissions from R199/user/month.
## Key Resources
- Download current SARS monthly tax tables from sars.gov.za
- Use SARS-approved payroll software for accurate calculations
- Keep detailed records of all deductions and calculations for audit purposes