<\/p>\n
Following the 2026 Budget, many employees may expect a welcome boost to their take-home pay from inflationary tax adjustments.<\/p>\n
On paper, it appears to be good news. When set against rising medical aid contributions and record fuel price increases, the outcome is far less encouraging.<\/p>\n
Read:
Treasury has space to extend fuel levy relief \u2013 Citi\u2019s Gina Schoeman
No April Fools\u2019 joke: Diesel still rockets over R7\/l, petrol over R3\/l
Budget in a minute<\/p>\n
For the first time in two years, income tax brackets were adjusted, delivering 3.4% inflationary relief. However, this lags behind actual inflation of 4.4% in 2024 and just outpaces 3.2% in 2025.<\/p>\n
So, what does this mean in real terms for the current tax year starting from 1 March 2026?<\/p>\n
For lower-income earners: Tax saving of approximately\u00a0R585 per year\u00a0(~R48.75 per month)
\nFor higher-income earners (~R2 million p.a.): Tax saving of approximately\u00a0R6 776 per year\u00a0(~R564.66 per month)<\/p>\n
At first glance, this appears meaningful \u2013 until cost increases are layered in.<\/p>\n
Medical aid: The silent erosion of relief<\/p>\n
Average medical aid increases for Discovery Health Medical Aid effective from 1 April 2026 range between 6.9% and 7.9% \u2013 dependent on medical aid plan type. This is well above inflation and has been year on year.<\/p>\n
This has a significant impact on members. Even at the higher end of tax relief:<\/p>\n
ADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n
A single member on Classic Comprehensive cover already exceeds the monthly tax saving as premiums increase by R739 per month.
\nA\u00a0Classic\u00a0Saver plan member sees relief almost entirely eroded with a monthly increase of R315.
\nFamilies experience a compounded effect, pushing them firmly into negative territory.<\/p>\n
The bottom line is that medical aid alone is enough to wipe out most, if not all an employee\u2019s tax relief.<\/p>\n
Read:
2026 medical aid contribution increases: DHMS vs the rest
Medical tax credit increase offers limited relief to households<\/p>\n
Fuel and electricity prices: The multiplier effect<\/p>\n
From April 2026, fuel prices have increased to their highest levels in months, with government providing temporary relief in the form of fuel levies being reduced by R3.00 per litre until 6 May 2026.<\/p>\n
Petrol prices have increased by about R3.06 per litre, pushing inland prices to around R23.36 per litre for 95 Unleaded fuel, while diesel increased by about R7.37 per litre, with broader inflationary effects across transport and goods.<\/p>\n
For employees, this translates into hundreds \u2013 or even thousands \u2013 of rand in additional monthly costs, particularly for those commuting long distances.<\/p>\n
Read:
Fuel hikes putting the squeeze on freight operators
How fuel spikes impact the price of bread
SA\u2019s living costs race ahead of inflation
Redo of old electricity tariffs kicks off in three municipalities<\/p>\n
In addition, from April 2026, direct Eskom customers will face an average electricity tariff increase of 8.76%, as approved by the National Energy Regulator of South Africa.<\/p>\n
The impact does not end there: municipal customers, who typically see adjustments from 1 July 2026, are likely to experience even higher increases, as municipalities often apply additional mark-ups above the Eskom tariff.<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
Same package, worse outcomes<\/p>\n
Let us look at it practically taking three employees on identical cost-to-company packages, but who experience very different \u2013 and increasingly negative \u2013 outcomes:<\/p>\n
Single employee:\u00a0may retain some tax relief
\nFamily on medical aid:\u00a0relief fully eroded
\nCommuting household:\u00a0materially worse off due to increasing fuel, electricity and medical costs<\/p>\n
The result is that net disposable income is declining, despite \u201crelief\u201d on paper.<\/p>\n
Why this matters for employers<\/p>\n
This is no longer just an employee issue. It is a business risk.<\/p>\n
Net pay is under pressure from multiple fronts, in the form of employees\u2019 tax with bracket creep, increased cost of benefits, and now fuel and electricity simultaneously.<\/p>\n
Fuel is a multiplier as it increases not only commuting costs, but also the price of food, goods, and services which will be felt in the upcoming months.<\/p>\n
Retention risk is rising because\u00a0employees are increasingly sensitive to even small changes in take-home pay, which may impact morale and retention.<\/p>\n
What makes this particularly important is that these pressures are largely outside the employer\u2019s control, but their impact on employees are not.<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
What employers should be doing now<\/p>\n
Employers need to take action sooner rather than later, which may include the following:<\/p>\n
Model the combined impact\u00a0of tax, medical aid, electricity, and fuel increases on net pay and re-assess salary increase percentages for 2026.
\nIntroduce flexibility\u00a0into benefit structures to improve affordability and educate employees on how to optimise their packages.
\nReassess remuneration design\u00a0and benefit offerings\u00a0to prioritise take-home pay where employees are struggling to make ends meet with their basic living expenses.<\/p>\n
Tax relief in isolation no longer tells the full story.<\/p>\n
When medical aid contributions increase, electricity tariffs are hiked and record fuel prices are factored in, many employees are facing a real decline in disposable income.<\/p>\n
Read:
Why more South Africans are paying tax without realising it
Expecting a big pay raise? What SA employees need to know
Why flexible pay structures are the future of retail employment<\/p>\n
What looks like relief is, in reality, a growing net loss.<\/p>\n
Employers who recognise this shift and respond with data-driven insights and smarter remuneration strategies, will be far better positioned to support their workforce, as well as retain critical talent in an increasingly pressured environment.<\/p>\n
Tanya Tosen is a tax and remuneration specialist at Tax Consulting SA.<\/p>\n
#Medical #aid #fuel #electricity #hikes #tax #relief #math #employers #ignore<\/p>\n","protected":false},"excerpt":{"rendered":"
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