#Budget2026: SA's actual growth numbers are not yet cause for celebration

Source: Supplied. Jurgen Eckmann, wealth manager at Consult by Momentum.

The withdrawal of R20bn in proposed tax increases added to the positive tone. Yet beneath the encouraging signals lies a more cautious reality: South Africa’s underlying economic growth remains modest and fragile.

GDP is projected at 1.6% this year, inching towards 2% over the medium term. That’s progress, but it’s not the picture of a booming economy. For consumers, this is a Budget that offers relief and even opportunity, but definitely not rescue. In other words: while the policy is moving in the right direction, wealth creation and preservation remain a personal responsibility.

With that in mind, here are 10 ways the 2026 Budget will actually impact the average South African – and what you should be thinking about in response.

1. Bracket creep relief (finally!)

When government adjusts personal income tax brackets in line with inflation, it increases the income thresholds at which higher tax rates apply by roughly the same percentage as inflation. After two years of frozen brackets, the tax tables have finally been adjusted again – to the relief of many salaried South Africans. This helps to stop the erosion of purchasing power that many earners experienced, as nominal salary increases pushed them into higher marginal rates without any real gain in income.

2. Your tax-free savings cap just increased

The annual Tax-Free Savings Account (TFSA) contribution limit rises to R46,000 – an additional R10,000 per year growing entirely tax-free. If you’re in a position to use it, this is one of the most efficient wealth-building tools available. The reality, however, is that many households are withdrawing from retirement savings under the two-pot system to survive, which puts their retirement at risk. If you can save, maximise it and realise the full power of compound interest. And try to leave your retirement Savings Pot well alone.

3. Retirement contributions – a bigger win than you realise

The retirement-fund deduction cap has increased significantly, and for higher earners especially, this enhances tax efficiency while building long-term capital. In a country where state support in retirement is extremely limited, these adjustments are also an indication that government expects the bulk of the retirement responsibility to sit squarely on your shoulders.

4. The R20bn tax hike that didn’t happen

Government withdrew previously proposed tax increases due to stronger-than-expected revenue collection. This is positive and supports confidence in SA. But it is not guaranteed to repeat itself if growth disappoints, so treat it as a welcome but probably temporary reprieve.

#Budget2026: Tax relief and infrastructure spending take centre stage

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5. Debt stabilisation – why this matters for your bond

Gross debt is projected to peak and gradually decline. The deficit is narrowing. Debt-service costs are easing. For consumers, this improves the long-term interest-rate outlook. When government borrows less, it competes less aggressively for capital, and over time, this supports lower borrowing costs and improved asset valuations.

But don’t celebrate too soon: the reality is that our debt still remains elevated. Stabilisation is a good foundation to work from, but should not be seen as a comfort zone.

6. R1tn for infrastructure (if it’s delivered)

Planned infrastructure spending exceeds R1tn over the medium term, with transport, logistics and energy being key focus areas. If executed efficiently, this investment in infrastructure will lower the cost of doing business and support job creation. However, if mismanaged, it becomes another missed opportunity. Execution will determine whether consumers feel the benefit.

7. Municipal dysfunction still threatens property values

Over 60% of municipalities are in financial distress, with water backlogs, electricity-distribution failures and governance weaknesses having direct and harsh repercussions for property owners. Municipal performance increasingly affects long-term property valuations, and so this risk deserves a place in estate- and retirement-planning conversations with your financial adviser.

8. Small business owners gain some structural relief

The Vat registration threshold has increased, reducing compliance burdens for many smaller operators. Capital gains tax exclusions for business disposals and primary residences have also improved. While these are not headline reforms, they materially enhance succession planning and retirement exits for entrepreneurs.

9. The savings paradox

Government is encouraging higher savings rates while nearly half the population depends on social support. For those with surplus income, this is one of the more favourable savings environments in years: low inflation, improved fiscal credibility, expanded tax-efficient limits. For those without surplus, survival understandably takes priority. And so while policy can create opportunity, it cannot create disposable income.

10. Cautious optimism is the only prudent view

Credit upgrades, fiscal discipline and reform momentum are real. But 1.6% growth in a country with unemployment above 30% is stabilisation – and stabilisation only.

This is a Budget that rewards discipline. If you manage tax efficiently, save consistently and invest with a long-term horizon, the policy backdrop is moving in your favour. Now is the time to consult with a qualified professional, such as a financial adviser, who can help you take advantage of these changes in your favour.