Get tax-savvy and save money

Last updated on 21st July, 2025 at 09:33 am

Yep, it’s that time of year again… tax season. If you’re a gainfully employed taxpayer, here are some pointers for saving on your tax bill while helping your bottom line.
Reading time: 8 minutes

In this article you’ll learn:

• How you can reduce your tax liability.
• Why you should pay taxes.
• Good personal financial habits.

“South African tax laws make it a legal requirement to pay tax if you earn above a certain amount. Not paying tax when you’re supposed to can result in penalties, interest, or even prosecution,” says Nicci Courtney-Clarke, COO and Head of Tax at online tax service TaxTim.

Your taxes help pay for essential services such as education, healthcare, social grants, infrastructure, police, fire services, and the judiciary. Tax also supports government operations, including civil servants’ salaries, funding parliament, and maintaining public institutions.

Tax season opened on 7 July for auto-assessments. Non-provisional taxpayers who were not auto-assessed must file their annual tax return by 20 October 2025. Provisional taxpayers, such as freelancers, commission earners, and landlords, must file by 19 January 2026.

How to pay less tax – the legal way

Tax is an inescapable part of adulting, and we enjoy better services when everyone pays the taxes they owe. At the same time, because the government wants to incentivise savings, you can pay less tax by making better financial decisions today.

But first, what is the difference between gross salary and net salary?
Your gross salary: the total amount you earn from your employer
Your net salary: what is paid into your bank account after deductions (such as income tax) and the tax you pay

The amount of tax you pay each month is calculated by taking what’s left of your salary into account after allowable tax deductions.
Gross salary – tax deductibles = the amount of tax you pay

Therefore, you can save some money on your tax bill, while putting your income to good use, by maximising your tax deductibles.

Read more about possible tax deductibles here.

Save now, save later: Retirement savings

Probably the most popular tax deduction, with the biggest payoff, is to invest for your retirement. You’re able to contribute up to 27,5% of your taxable income or your remuneration – whichever is the greater – to a maximum of R350 000 per year. “This limit applies to the total contributions you make to any pension, provident, or retirement annuity (RA) fund during the year. The tax deduction will always be limited to the actual contributions you made,” says Courtney-Clarke.

If you have a pension or provident fund, your employer will usually structure your contributions, and you’ll see these on your monthly payslip. You can contribute additional money to your retirement through an RA fund and report the details in your annual tax return. RA contributions reduce your taxable income, so it reduces your overall tax liability, and you may even have a potential tax refund.

“Because you may not access your RA funds until you are 55 years old, this is a great way to save for your future, while also reducing your annual tax bill,” says Courtney-Clarke.

Save now, save later: Tax-free savings

If you’ve already maxed out your RA contribution, you could also start a tax-free savings account, where your money is invested in a combination of financial products, including unit trusts, fixed deposits, etc.

The advantage of a tax-free savings account is that all the returns – interest, dividends, and capital gains- will be tax-free. So, you don’t pay tax on the growth of your investment, nor if you decide to withdraw money from the account.

You can have as many tax-free savings accounts as you want, but you are allowed to invest a maximum of R36 000 a year and a lifetime limit of R500 000 across your tax-free savings accounts. These limitations aren’t per TFSA. Once you’ve reached this lifetime limit, no further investment in tax-free savings accounts is allowed.

Read more about tax-free savings accounts for every life stage here.

Be a good citizen

If you donate money to a SARS-registered charity, you can also claim that money back, as long as it’s 10% or less than your taxable income. These are public benefit organisations (PBOs) and they will need to provide an 18A tax certificate to you so you can declare the details on your tax return.

Medical aid for the win

You can also save on tax by being the main member of a medical aid – i.e., the person responsible for paying contributions for yourself and your dependents. You get a fixed monthly tax credit of R364 for you as the primary member, another R364 for your first dependent, and R246 per additional dependent. This is a flat rate every month and doesn’t vary according to your income. In certain circumstances, you may also be able to claim additional medical expenses incurred during the year.

Cover your expenses

If you receive a travel benefit or a company car, you should keep a logbook to record your business mileage. These are taxable fringe benefits, and you will be taxed on them otherwise.

If you’re a commission earner, a freelancer, or a sole proprietor, you can also claim expenses you incurred in earning your income. And if you travel for work, you can claim either your actual daily expenses, such as meals, or a subsistence allowance at the SARS rate.

Remember, as a Sanlam Reality member, you get free tax assistance through TaxTim.

Do the right thing

Bottom line? Practice good personal finance habits, such as saving for the future, donating to charity, and keeping receipts. If you think you may have allowable expenses for tax purposes, check out the deduction and see if you qualify.