How to Legally Pay Less Tax in South Africa in 2025

With tax hikes looming in 2025, South Africans are looking for ways to reduce their tax burden legally. Experts stress that by making smart financial decisions, taxpayers can maximize deductions and avoid paying more than necessary.

From retirement annuities to tax-free savings accounts and medical aid tax credits, here are some of the best ways to keep more of your hard-earned money while staying compliant with SARS regulations.

1. Maximise Retirement Savings

One of the most effective ways to reduce taxable income is by contributing to a retirement annuity (RA) or pension fund. The South African Revenue Service (SARS) allows deductions of up to 27.5% of taxable income (capped at R350,000 annually) for retirement contributions.

This means that setting aside money for your future also lowers your tax bill today.

2. Claim Medical Aid Tax Credits

If you contribute to a medical aid scheme, you may qualify for medical tax credits, which reduce the amount of tax you owe. SARS provides a fixed monthly rebate per member and dependant, effectively lowering your tax liability.

However, ensure that you personally benefit from these credits, as employer contributions may already include them.

3. Use Tax-Free Savings Accounts (TFSA)

Tax-free savings accounts allow individuals to grow their money without paying tax on interest, dividends, or capital gains—as long as they stay within the annual and lifetime limits.

For 2025, the annual limit remains R36,000, with a lifetime cap of R500,000. Utilizing a TFSA ensures that your investment earnings are fully tax-exempt.

4. Donate to Public Benefit Organisations (PBOs)

SARS permits taxpayers to donate up to 10% of their taxable income to registered Public Benefit Organisations (PBOs) and claim deductions.

For this to be valid, the charity must issue a Section 18A certificate, which allows you to deduct the donated amount from your taxable income.

5. Ensure Accurate PAYE Deductions

If you pay tax through Pay-As-You-Earn (PAYE), confirm that your employer is deducting the correct amount. Incorrect deductions could lead to unexpected tax liabilities when filing your tax return.

Regularly reviewing your IRP5 certificate can help you spot any discrepancies before it’s too late.

6. Deduct Home Office and Travel Expenses (If Eligible)

If you work remotely or use your home for business purposes, you may qualify for a home office deduction. However, this requires meeting SARS criteria, such as having a dedicated workspace used exclusively for business activities.

Similarly, if your job requires frequent travel, keeping an accurate logbook of work-related travel expenses can help claim deductions.

While tax hikes are unavoidable, South Africans can still legally minimise their tax burden by taking advantage of deductions and tax-saving accounts. Proactive financial planning, from retirement savings to medical tax credits, can help taxpayers keep more money in their pockets.

By understanding SARS regulations and using legal tax-saving strategies, South Africans can navigate the 2025 tax landscape more efficiently.

{Source BusinessTech}

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