Tax on interest explained
Interest you earn on savings counts as income, but most South Africans pay no tax on it because of the annual interest exemption.
The interest exemption
Each tax year, the first part of the local interest you earn is exempt from income tax. Above that, interest is added to your taxable income and taxed at your marginal rate.
| Your age | Interest exempt each year |
|---|---|
| Under 65 | R 23 800 |
| 65 and older | R 34 500 |
At 8% a year, you would need roughly R 297 500 in savings before the interest went over the under-65 exemption. Interest from all your accounts counts together, including money market accounts, notice deposits, fixed deposits and RSA Retail Savings Bonds.
Dividends and other returns
- Dividends from South African shares are not taxed as income. Instead, 20% dividends withholding tax is deducted before you receive them.
- Foreign interest and dividends are taxed differently and do not use the local interest exemption in the same way.
- Growth in the value of shares or unit trusts is a capital gain, taxed only when you sell, with an annual exclusion of R 50 000.
- Tax-free savings accounts pay no tax on interest, dividends or growth, within the yearly R 46 000 limit.
Do I need to declare it?
Yes. Banks send SARS an IT3(b) certificate with your interest each year, and it is usually pre-filled on eFiling. If your interest and other non-salary income go over the limits, you may also need to register for provisional tax.
Using the exemption well
If you are married, each spouse has their own exemption, so savings held in both names can earn more interest tax-free. Once you are close to the exemption, a tax-free savings account is usually the next place to save.
Frequently asked questions
Is interest on my home loan access bond taxed?
No. Money you put into your bond reduces the interest you pay; it does not earn interest, so there is nothing to tax.
Does the exemption apply to unit trusts?
Only to the interest part of what a unit trust distributes. Dividends and capital gains are treated separately.
What if my interest is over the exemption?
The excess is taxed at your marginal rate on assessment. If it is large, you may need to pay provisional tax during the year.
Related calculators
Compound Interest Calculator
See how an initial amount and recurring contributions could grow over time at a chosen rate and compounding frequency.
Open calculator →CALCULATORTax-Free Savings Account Calculator
See what a tax-free savings account could grow to, when you will reach the R 500 000 lifetime limit, and whether your plan goes over the R 46 000 annual limit.
Open calculator →CALCULATORInvestment Growth Calculator
Model the future value of regular investing using your own return assumption.
Open calculator →Exemption amounts from SARS: rates of tax for individuals (section 10(1)(i) of the Income Tax Act); dividends tax rate from SARS. Savings figure is 23 800 ÷ 8%. Checked 16 October 2026.