Smart ways to legally lower your 2025 tax bill
Learn five effective ways to legally reduce your 2025 tax contribution, including Tax-Free Savings Accounts…
With tax season approaching in mid-July, now is the time to start planning how to minimize your 2025 tax contribution.
While South Africa is facing a proposed VAT increase of 1% over two years, there are still legal strategies to safeguard your income. Here are five key ways to maximize deductions and reduce your tax burden.
1. Maximise your Tax-Free Savings Account (TFSA)
Investing in a TFSA is one of the simplest ways to grow your wealth without worrying about taxation. Earnings from these accounts—whether from unit trusts, fixed deposits, or bonds—are entirely tax-free, provided you stay within the limits:
- R36,000 per tax year
- R500,000 lifetime limit
2. Contribute to a Retirement Annuity (RA)
Retirement annuities not only secure your future but also offer significant tax deductions. Contributions to pension, provident, and RA funds are tax-deductible up to 27.5% of your taxable income (capped at R350,000 annually). If you have additional cash on hand, topping up your RA can lower your taxable income while building long-term savings.
3. Support a Public Benefit Organisation (PBO)
Donations to registered non-profits or Public Benefit Organisations (PBOs) can earn you a tax break. SARS allows deductions of up to 10% of your taxable income for contributions to approved charities, covering areas like education, healthcare, and environmental conservation.
4. Track your business travel
If you receive a travel allowance, keeping detailed records can significantly reduce your taxable income. SARS allows 80% of this allowance to be tax-free, provided you maintain an accurate travel logbook.
5. Join a medical aid scheme
Enrolling in a medical aid plan provides monthly tax credits, reducing your overall tax bill. This applies to the main member and extends to dependents, offering a financial advantage for families.
By taking advantage of these legal tax-saving strategies, you can optimize your finances and reduce your 2025 tax contribution while staying fully compliant with SARS regulations.