Watch VideoBudget 2026 | Treasury offers personal tax relief, but raises sin taxes

Finance Minister Enoch Godongwana again increased “sin taxes”. Finance Minister Enoch Godongwana has raised ‘sin’ and fuel taxes, but also provided inflation-linked relief for personal income taxpayers in the 2026 National Budget. Personal income tax bracketsand rebates will be fully adjusted for inflation, preventing bracket creep.

“We are also proposing additional tax measures to ease the financial burden on households and businesses, by adjusting personal income tax brackets and rebates fully in line with inflation.” Ahead of the National Budget, many commentators were concerned that there would be no inflation-related increase in tax brackets. As a result, they warned, consumers would theoretically earn more, but their disposable income would drop. Treasury said the adjustment would help protect disposable income at a time when many households remain financially constrained.

Government also proposed boosting tax-advantaged savings incentives. The annual tax-free investment contribution limit will increase from R36,000 to R46,000, while the cap on retirement fund deductions will rise from R350,000 to R430,000. Godongwana said increases in so-called “sin taxes” were unavoidable despite an improved revenue outlook.

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The minister, addressing Parliament this afternoon, said: “Madam Speaker, increases to certain taxes are unavoidable.” As a result, the tax on tobacco products will rise in line with inflation in 2026/27, including taxes on electronic nicotine and non-nicotine delivery systems, Godongwana announced. Inflation is 3.5%. Ahead of the Budget,Diageo cautionedthat an increase of around 6% – in line with previous years – would push the tax on a bottle of spirits to more than R100.

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