2027 Tax Tables: Payroll Update
The 2027 tax tables are live, and every South African employer running payroll needs to confirm their system has been updated. Using last year's brackets, even for a few weeks, exposes the business to incorrect PAYE deductions, inaccurate IRP5 certificates, and potential SARS penalties. This article covers what changed, what the risks are, and how to bring payroll into line before the next pay run.
Every year, the Minister of Finance adjusts the personal income tax brackets to account for inflation. Economists call this mechanism a defence against "bracket creep": without annual adjustments, ordinary salary increases driven by inflation can push employees into higher marginal tax brackets, leaving them worse off in real terms despite earning a nominally higher salary.
SARS has published updated bracket thresholds and rebate values for the 2027 tax year (covering all remuneration paid between 1 March 2026 and 28 February 2027). Employers in South Africa are legally obliged under the Income Tax Act to apply these rates when calculating Pay-As-You-Earn (PAYE) deductions from employee remuneration each month.
Processing payroll against the 2026 tables instead of the 2027 ones carries real compliance risk. The problems compound quickly, and they affect both employees and the business's standing with SARS.
Over-deducting PAYE means employees take home less net pay than they're legally entitled to, which causes financial strain and can breed workplace dissatisfaction. Under-deducting PAYE has the opposite problem: employees face an unexpected tax bill when they submit their annual returns, and that creates friction and erodes trust. Inaccurate monthly EMP201 submissions (the employer declaration to SARS) can trigger compliance queries, administrative penalties, and interest charges. Once the biannual EMP501 reconciliation runs, the figures won't balance, leading to time-consuming corrections and potential SARS audits. And year-end IRP5 certificates issued from incorrect monthly deductions will themselves be wrong, requiring manual recalculation and resubmission to SARS.
For related guidance on employer compliance obligations, visit our payroll and tax services page.
Staying compliant with the 2027 tax tables doesn't require specialist knowledge. It comes down to three steps at the start of the tax year.
Reputable cloud-based payroll platforms, including SimplePay, Sage Payroll, and Xero Payroll, typically deploy the new SARS tax tables automatically at the start of the tax year. Automatic doesn't mean guaranteed, though. Log into the platform, go to the tax tables or payroll settings section, and confirm the 2027 brackets and rebate values are in place before processing the first March pay run rather than assuming the update has been applied.
Alongside the standard tax brackets, the Medical Scheme Fees Tax Credits (commonly called medical aid rebates) are updated annually after the Budget Speech. The primary member rebate, the secondary member rebate (for a dependant over 65), and the additional dependant rebates all need updating. If these aren't correctly reflected in the payroll system, employees will pay more PAYE than the law requires. Check the current rebate values on the SARS website or confirm with the payroll provider.
The start of a new tax year is a good time to review travel allowances, reimbursable expense policies, and fringe benefit valuations. SARS guidelines, updated periodically, govern how company vehicles, cell phone allowances, and accommodation provided to employees are taxed. An annual allowance audit keeps these correctly categorised and avoids a compliance gap that SARS often flags during employer audits.
For related compliance guidance, see our article on PAYE and employer tax obligations on the blog.
There's no need to panic if a March or April payroll has already gone out using the 2026 tax tables. SARS allows employers to make corrective adjustments in later pay periods: recalculate the correct PAYE using the 2027 tables, then apply the adjustment in the following month's run. If employees' net pay will change as a result, tell them clearly and in advance.
Where the errors span multiple months, or incorrect EMP201 returns have already been submitted to SARS, consult a qualified tax professional before making any corrections. Incorrectly submitted EMP201s can be revised, but the process needs care to avoid triggering a compliance audit.
The 2027 tax year brackets apply to all remuneration paid or payable between 1 March 2026 and 28 February 2027. These updated tables must be applied from the first payroll run in March.
PAYE (Pay-As-You-Earn) is a mandatory withholding tax on income that South African employers deduct from employee salaries each month and pay to SARS by the 7th of the following month. Because SARS adjusts the tax brackets and rebates annually, your payroll system must reflect the current year's tables to deduct the correct amount.
If you use modern cloud-based payroll software, the update is typically applied automatically by the platform. However, you should always log in and confirm the update before processing your first pay run. Manual spreadsheet payrolls must be updated manually using the figures published on the SARS website.
Under-deducted PAYE will create a shortfall in your EMP501 reconciliation. You may be held liable for the under-deducted amount, along with penalties. Your affected employees will also owe SARS money at year-end, which is a source of financial stress and erodes employer trust.
Updating payroll to reflect the tax tables SARS publishes each year isn't optional. Confirm the software is updated, verify the medical aid rebate values, and run an annual allowance audit before the first March pay run. Getting these right keeps employees away from tax shocks and keeps the EMP201 submissions and year-end EMP501 reconciliation in balance.
Need expert tax and accounting support? The Compliance Clinic helps South African businesses stay compliant, reduce tax liabilities, and grow with confidence. Contact us today: Contact us | View our services: Services
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