Salary & tax › Retirement Annuity Tax Saving Calculator

Retirement Annuity Tax Saving Calculator

Work out how much tax you save by paying into a retirement annuity, and what the contribution really costs you after the SARS deduction.

Income and contributions

Annual taxable income (before retirement contributions)

Other retirement fund contributions a year (pension or provident fund)

Monthly retirement annuity contribution

Your age

TAX SAVED A YEAR

—

Lower PAYE or a bigger refund

TAX SAVED A MONTH

—

Annual saving ÷ 12

REAL COST A YEAR

—

Contribution less the tax saved

Maximum deduction this year: —

Worked example

These are the calculator's starting values, so the results above match this example until you change an input.

On a taxable income of R 500 000 a year, putting R 3 000 a month (R 36 000 a year) into a retirement annuity cuts your income tax by R 11 160 a year, or R 930 a month.

So the R 36 000 you save really costs you R 24 840. You can deduct up to R 137 500 a year (27.5% of your income), so all of it counts this year.

How the retirement fund deduction works

Contributions to a retirement annuity (RA), pension fund or provident fund are deducted from your taxable income before your tax is worked out. The deduction is limited to 27.5% of the greater of your remuneration or taxable income, and to R 430 000 a year from 1 March 2026 (up from R 350 000). Contributions your employer makes for you count toward the same limit, because they are taxed as a fringe benefit and then deducted.

Why the saving depends on your tax bracket

Each rand you deduct comes off the top of your income, so it saves tax at your highest (marginal) rate. Someone in the 31% bracket saves R 310 for every R 1 000 they put into an RA; someone in the 41% bracket saves R 410. If your income is below the tax threshold, an RA saves no tax.

Taxable income	Marginal rate
R 1 – R 245 100	18%
R 245 101 – R 383 100	26%
R 383 101 – R 530 200	31%
R 530 201 – R 695 800	36%
R 695 801 – R 887 000	39%
R 887 001 – R 1 878 600	41%
R 1 878 601 and above	45%

How you get the saving

If your employer deducts the RA from your salary, your PAYE drops straight away. If you pay the RA yourself, you get the saving back as a refund when you file your tax return: your RA provider sends you an IT3(f) certificate to claim it. Contributions above the limit are carried forward to later years and can make part of your retirement income tax-free.

How this calculator works

It works out your income tax with the 2026/27 SARS brackets and rebates, with and without the new contribution, and shows the difference. It applies the 27.5% limit to the income you enter and leaves out medical tax credits and other deductions, so your actual saving may differ slightly.

Sources and review note

Deduction limit checked on 13 October 2026: 27.5% of remuneration or taxable income, capped at R 430 000 a year from 1 March 2026 (Budget 2026). Tax rates from SARS: rates of tax for individuals. This page is general educational information, not tax or financial advice.

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Frequently asked questions

How much can I contribute to an RA and deduct from tax?

Up to 27.5% of your remuneration or taxable income, whichever is higher, with a maximum of R 430 000 a year from the 2026/27 tax year. The limit covers all your retirement funds together.

How much tax will I save with a retirement annuity?

Roughly your marginal tax rate times the contribution. At R 3 000 a month on a R 500 000 income, the saving is R 11 160 a year, because the whole R 36 000 comes off income taxed at 31%.

When do I get the RA tax back?

If the contributions go through payroll, straight away as lower PAYE. Otherwise as part of your refund after you file your annual return, using the IT3(f) certificate from your RA provider.

What happens to contributions above the limit?

They are carried forward and deducted in a later year, or they reduce the tax on your lump sum or annuity when you retire. They are not lost.

Can I withdraw from a retirement annuity?

Under the two-pot system you can take money from the savings component once a tax year (at least R 2 000), taxed at your marginal rate. The retirement component stays locked until you retire, from age 55.

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