Only 2.4% of South Africans pay 77% of all income tax

South Africa’s tax base is highly concentrated, with 2.4% of South Africans paying 77% of all personal income tax in the country. 

This means that just over 1.5 million people out of the broader population pay R562 billion worth of personal income tax in South Africa. 

SARS revealed this in its 2025 tax statistics, released late last year, which outline where the state’s tax revenue comes from.

The revenue service has historically been one of the most efficient parts of South Africa’s state apparatus, with it routinely exceeding expectations with regard to tax revenue. 

In recent years, it has managed to make inroads in reducing South Africa’s tax gap to raise more revenue in a stagnant economy, without rate increases. 

Over the past 30 years, tax collections have increased from R113.8 billion in 1994/95 to R1.9 trillion in 2024/25. This is a compound annual growth rate of 9.8%. 

The largest share of this revenue comes from personal income tax, which contributes 37.4% of all collections in South Africa. This equates to R729.9 billion. 

Personal income tax is levied on the taxable income of all individuals and trusts. It is determined for a specific year of assessment and includes taxable capital gains. 

This tax largely comes in the form of three taxable payment streams –

• Employees’ tax (PAYE) is collected by employers and paid to SARS monthly.
• Provisional tax is payable every six months by any person who derives income other than remuneration, an allowance, or an advance
• Assessed tax, which is paid on the annual final assessment of tax payable

The vast majority of revenue comes from PAYE or employees’ tax, which is levied on salaries, pension or annuity payments, and investment income. 

Income from salaries, wages, and other forms of remuneration accounted for over 75% of all total taxable income for the 2024/25 tax year. 

The number of individuals registered for personal income tax has surged in recent years, after it became mandatory to receive a tax number from SARS, even if one’s income falls below the income tax threshold. 

Over 27 million South Africans are registered for personal income tax, with this number growing by a steady 4% per annum for the past few years. 

However, a large number of these individuals do not earn more than the income tax threshold, with only 9.1 million expected to submit returns. An even smaller number of 7.7 million have their taxable income assessed. 

As a result, a large number of people are at zero and do not contribute to personal income tax. This makes it highly concentrated and vulnerable to economic shocks. 

South Africa’s concentrated tax base

South Africa has a highly concentrated tax base, with a relatively small proportion of individuals contributing most revenue for the state. 

In the latest tax statistics, SARS revealed that 80.4% of assessed individual taxpayers had taxable income of less than R500,000. 

This means that the vast majority of South Africans fall below the tax return submission threshold for employment income, the revenue service said. These taxpayers earned 44.1% of the total taxable income and contributed 23% of the tax assessed. 

As a result, only 19.6% of the taxpayers assessed by SARS earned more than the R500,000 threshold. These individuals, however, contributed 77% of all personal income tax assessed. 

SARS data enables individuals to take this calculation further, with its latest tax statistics showing that 1.51 million South Africans pay 77% of all income tax.

This makes a tiny proportion of the country’s population responsible for over a quarter of the state’s tax revenue, symbolising South Africa’s concentrated tax base. 

The Centre for Risk Analysis’ Anlu Keeve explained that the highly concentrated nature of South Africa‘s tax base limits the government’s ability to raise tax revenue by increasing rates. 

“It is important to understand where the government’s tax revenue comes from, because it tells us that the state relies heavily on individuals and companies to fund its operations,” Keeve said. 

“So, increasing taxes means that a certain group will carry a disproportionately heavier burden. It also emphasises the point that the government is reliant on private individuals and businesses to deliver on its promises.”

“If we take a step back and look at the breakdown of personal income tax, the top two groups pay 95% of all personal income tax revenue.” 

“This emphasises the point that South Africa has a very narrow tax base and it is problematic for various reasons.” 

Efficient Group chief economist Dawie Roodt previously said this shows that South Africa has gone over the edge with regard to its tax rates. 

Roodt said the government is over the Laffer Curve with its personal income tax and corporate income tax, and that any increases in tax rates are likely to result in less revenue for the state. 

The charts below, courtesy of SARS, show the highly concentrated nature of South Africa’s tax base, with a few individuals bearing the brunt of the burden.

This graphic shows the number of taxpayers as a proportion of those registered for tax, not the entire population of South Africa.