Start with the top and read down. Earnings create gross pay. Tax rules turn some of that into taxable income and PAYE. Payroll deductions take off UIF and workplace costs. What remains is net pay—the amount transferred to you.
The tax year used here
This guide uses South Africa’s 2027 year of assessment, running from 1 March 2026 to 28 February 2027. Tax tables change, so match a guide or calculator to the date of the payslip.
Gross salary is not always taxable income
Gross salary is pay before employee deductions. It normally includes basic salary and can include overtime, commission, a bonus and taxable allowances or fringe benefits. “Cost to company” can be higher because it may also include employer-paid benefits that do not all arrive as cash.
Taxable income is the annual amount to which the SARS table is applied after permitted deductions. On a simple payslip, a deductible pension, provident-fund or retirement-annuity contribution can make taxable income lower than gross remuneration. Travel allowances, company cars, irregular income and other benefits make the statutory calculation more complicated.
PAYE is tax collected through payroll
PAYE means Pay As You Earn. It is employee’s tax withheld by your employer and paid to SARS towards your annual income-tax liability; it is not a second tax added on top of income tax. Payroll generally uses remuneration-to-date and SARS deduction tables, while a yearly calculator smooths the same idea into an annual estimate.
The 2027 individual rates run from 18% to 45%, but the system is progressive. The first R245 100 of taxable income is taxed at 18%. Only the slice from R245 101 to R383 100 is taxed at 26%; later slices have their own rates. Entering a higher bracket never moves all earlier income into that rate.
After tax from the brackets is calculated, age-based rebates reduce the bill. The 2027 primary rebate is R17 820. Additional rebates are R9 765 from age 65 and R3 249 from age 75. These amounts stack with age and cannot reduce tax below zero.
Retirement and medical aid work differently
An employee retirement-fund contribution is money sent to a pension, provident or retirement-annuity fund. It still belongs to your retirement saving, but it does not reach your bank account. Section 11F can deduct eligible contributions before tax, subject to the full statutory tests. For a salary-and-bonus-only estimate, the deduction simplifies to the lower of the contribution, 27.5% of remuneration and the 2027 annual cap of R430 000. Employer contributions can appear as taxable fringe benefits and deemed employee contributions, so the payslip may show entries on both sides.
A medical-scheme premium is normally a cash deduction from pay. The tax relief is not a deduction of the whole premium from income. Instead, the 2027 section 6A medical scheme fees tax credit reduces tax by R376 a month for the taxpayer, another R376 for the first dependant and R254 for every additional dependant. The separate additional medical expenses credit is not a simple monthly amount.
UIF, employer lines and other deductions
For an ordinary employee, UIF is generally 1% from the employee and another 1% from the employer. UIF remuneration is capped at R17 712 a month, so the normal maximum taken from the employee is R177.12 a month. The employer’s separate contribution is a business cost, not another R177.12 to subtract from your net pay.
A payslip may also show medical aid, group life cover, a union fee, staff-loan repayment, garnishee order or voluntary saving. Read the labels and ask payroll which items are compulsory. Employer contributions and taxable benefits may be displayed for reporting even when they are not cash deductions. Net pay is gross cash earnings less PAYE, employee UIF, employee retirement contributions and every other employee deduction.
Worked example: R30 000 gross a month
One employee, under 65, for the full 2027 tax year
Assume a regular R30 000 monthly salary, no bonus, an employee retirement contribution of R2 250 a month, one person on a medical scheme and a R2 000 monthly medical premium. There is no other income or deduction.
| Annual gross remuneration | R30 000 × 12 = R360 000 |
|---|---|
| Allowed retirement deduction | R2 250 × 12 = R27 000 |
| Taxable income | R360 000 − R27 000 = R333 000 |
| Tax from brackets | R44 118 + 26% × R87 900 = R66 972 |
| Less primary rebate | R66 972 − R17 820 = R49 152 |
| Less medical credits | R49 152 − (R376 × 12) = R44 640 PAYE a year |
| Monthly PAYE | R44 640 ÷ 12 = R3 720 |
| Monthly net pay | R30 000 − R2 250 − R3 720 − R177.12 UIF − R2 000 medical aid = R21 852.88 |
The retirement contribution is fully deductible here: R27 000 is below 27.5% of R360 000 and below R430 000. The medical premium itself is still deducted from cash; its R376 monthly credit has already reduced PAYE.
Marginal rate is not effective rate
In the example, taxable income reaches the 26% bracket. That marginal rate describes the bracket applied to the next taxable rand. It does not mean 26% of the whole salary disappears. The first R245 100 remained in the 18% slice, then the rebate and medical credit reduced the bill.
The effective PAYE rate is R44 640 divided by R360 000, or 12.4% of gross remuneration. UIF and medical-aid premiums are not PAYE, so combining every payslip deduction and calling the result a “tax rate” gives the wrong answer.
Why your actual payslip can differ
Real payroll is month-by-month. A bonus, mid-year raise, commission, unpaid leave or starting work part-way through the tax year can shift one month sharply. A payroll can also include travel allowances, employer fringe benefits, tax directives, prior-period corrections and rounding. Your eventual assessment can include other income and deductions that the employer did not know about.
The My Money Matters calculator models one salary for a full year, one annual bonus, age rebates, fixed medical credits, a simplified retirement deduction and ordinary employee UIF. It does not subtract the medical premium or other workplace deductions from its take-home result, and its UIF estimate applies to regular salary rather than adjusting a low-salary bonus month.
Official sources
Tax and payroll figures last checked .
Put your own salary through the workings
Estimate the annual brackets, rebates, medical credits, PAYE and UIF, then compare the result with the tax lines on your payslip.
Open the 2027 income-tax calculator →