On 12 March 2025, the Minister of Finance, Enoch Godongwana, delivered the highly anticipated National Budget Speech.  In the 2025 South African budget, the government plans to increase the Value Added Tax (VAT), while personal income tax brackets and rebates remain unchanged, effectively increasing taxes due to inflation. 

Here's a breakdown of key budget insights

VAT Increase

Starting May 1, 2025, the Value Added Tax (VAT) will increase slightly from 15% to 15.5%. This means things like groceries, clothes, and services will cost a bit more. Finance Minister Enoch Godongwana's 2025 Budget includes important tax and financial changes that will affect both individuals and businesses. The biggest update is the VAT hike, which will happen in stages: 0.5% on May 1, 2025, and another 0.5% on April 1, 2026, bringing VAT up to 16% over two years. To help lower-income households, more essential food items will be added to the list of VAT-free products.

No Inflation Adjustment to Personal Income Tax

Tax brackets are staying the same, so if your salary goes up, you might have to pay more tax, even though the cost of living is also rising.

Social Grant Adjustments

Here are the confirmed increases:

• Old age grant will increase from R2185 to R2315
• War veterans grant will increase from R2205 to R2335
• Disability grant will go up from R2185 to R2315
• Foster care grant rises from R1180 to R1250
• The care dependency grant will increase from R2185 to R2315
• Child support grant will go up from R530 to R560
• The grant-in-aid will increase from R530 to R560

Sin Tax Increases

Concurrently, tobacco products will face a 4.75% increase for cigarettes, cigarette tobacco, and electronic nicotine and non-nicotine delivery systems (widely known as “vaping”), while pipe tobacco and cigars are slated for a more substantial 6.75% adjustment.

National Health Insurance (NHI) Funding

More money is being set aside for improving public healthcare, including patient information systems. This might lead to better services at government clinics and hospitals over time.

Government Spending

The government plans to spend more on infrastructure—like roads and public services—over the next few years, which could make everyday life easier.

Debt-Service Costs

A big chunk of the taxes you pay will go toward paying off the country’s debt, leaving less money for other government programmes.

Public Sector Spending

The budget includes funds for public servants' wages, which helps support those working in government services.

The 2025 Budget brings changes like a VAT increase and higher social grants, aiming to ease pressure on lower-income households. More spending on healthcare and infrastructure could improve public services, but balancing this with debt repayments will be tricky. It’s a time to plan ahead and adapt to these shifts.