Only 2.4% of South Africans pay 77% of all income tax
South Africa’s personal income tax system is highly concentrated, with just 2.4% of taxpayers contributing 77% of all personal income tax, according to SARS’ latest 2025 tax statistics.
This equates to around 1.51 million people paying R562 billion in personal income tax, making a small group of earners responsible for more than a quarter of total government revenue.
Where tax revenue comes from
Over the past three decades, total tax collections have grown from R113.8 billion in 1994/95 to R1.9 trillion in 2024/25, with personal income tax now accounting for 37.4% of total revenue, or R729.9 billion.
Most of this revenue comes from employees’ tax (PAYE), which is deducted from salaries, pensions, and annuities. Income from salaries and wages alone made up over 75% of total taxable income in the 2024/25 tax year.
Many registered taxpayers pay nothing
More than 27 million South Africans are registered for personal income tax, but only 9.1 million are expected to submit returns, and just 7.7 million are actually assessed.
A large portion of registered taxpayers earn below the tax threshold, meaning they contribute nothing to personal income tax. This makes the tax system narrow and vulnerable to economic shocks.
A narrow and risky tax base
SARS data shows that:
-
80.4% of assessed taxpayers earn less than R500,000 a year
-
This group earns 44.1% of total taxable income, but pays only 23% of personal income tax
-
The remaining 19.6% of taxpayers earn above R500,000, yet pay 77% of all income tax
Economists warn that this level of concentration severely limits government’s ability to raise taxes further.
Why higher taxes may backfire
The Centre for Risk Analysis’ Anlu Keeve said the state’s heavy reliance on a small group of individuals and businesses means that any tax increases would disproportionately hit the same taxpayers.
Efficient Group chief economist Dawie Roodt added that South Africa is likely already beyond the Laffer Curve, meaning higher tax rates could actually reduce overall revenue rather than increase it.
The bottom line
South Africa’s tax system depends on a very small pool of high earners, leaving government finances exposed to economic downturns, emigration, and job losses.
As experts warn, without broader economic growth and job creation, the country has little room left to raise taxes without damaging its own revenue base.
Do you need a Quote for our Tax and Accounting Services?
Contact our team via any of the following channels to get a proposal for your accounting and tax services:
Subscribe to our newsletters.
Purchase Contract TEMPLATES and BUSINESS STATIONERY at www.ZEELIEONLINE.com
Disclaimer:
The views or opinions expressed on this site are solely those of the original authors and other contributors.
The material and information contained on this website is for general information purposes only.
This information is for general purposes only. Don't use this information for making business, legal and tax decisions without consulting a professional.
We do not make any express or implied representation, as to the completeness or accuracy of the information published.
Tax law regularly changes, so any tax information on this site could become outdated.
We are not responsible for any other websites that you may access through links on our website.
ZPA accepts no liability for any loss or damage arising from the use of any material on this site.
