While the 2026 Budget in South Africa may feel like old news already, several changes announced could make a difference to your long-term financial planning. Simply put, various limits were increased and by tweaking your financial plan, you could benefit from them.
Take a moment and consider which changes offer the opportunity to structure your finances more tax-effectively for long-term growth.
Tax-free Savings Accounts: increased to R46,000 per year
From 1 March 2026, the annual contribution limit for a Tax-free Savings Account (TFSA) increased by R10,000, to R46,000 per annum. The lifetime contribution cap remains at R500,000 but may be increased in the future. An extra R10,000 annual contribution may seem modest, but returns earned within a TFSA are exempt from income tax, dividends tax and capital gains tax, making these accounts an attractive component of a long-term investment strategy. Over time, tax-free growth can compound to a significant sum.
If you have previously contributed R36,000 a year, consider whether your budget allows you to increase your contributions towards the new R46,000 limit. Any unused annual TFSA contributions are forfeited, so contributing less than the limit is a permanent missed opportunity to earn tax-free returns.
Retirement savings: a higher deduction limit
The annual tax-deductible contribution limit for retirement funds has increased by R80,000 (from R350,000 to R430,000) with effect from 1 March 2026. Contributions remain subject to the broader limit of 27.5% of remuneration or taxable income calculation, with the R430,000 amount acting as the annual cap.
If you are able to increase your retirement contributions, you have an opportunity to build retirement capital while potentially improving the tax efficiency of your overall financial plan. It is worth reviewing your current contribution rate rather than simply allowing it to remain unchanged.
More flexibility for offshore spending and investing
The Single Discretionary Allowance (SDA) has doubled from R1 million to R2 million per adult resident per calendar year (not per tax year). The increase provides greater flexibility for individuals who wish to move funds abroad for permitted purposes, including travel and certain investments.
If you are considering offshore diversification, this is an important change to take into account when planning your investments.
So yes, the limits have changed, but what do the changes mean for you?
Before the year gets away from you, review your monthly budget, savings and investment contributions, and ask yourself the following questions:
- Could an additional amount be directed towards your TFSA?
- Should your retirement contribution be increased?
- Are offshore investments part of your long-term diversification strategy?
Check in with your CERTIFIED FINANCIAL PLANNER® professional
As always, the right answer will depend on your circumstances, objectives, liquidity needs and broader financial plan. Chat to us before making significant changes so that we can help ensure that any additional contributions or investments fit appropriately into your overall strategy.
A small adjustment today could make a meaningful difference to your financial position over the long term.
Morné Bezuidenhout, CFP®
B.Com LLB
