Tax on Bonuses, 13th Cheques and Commission in South Africa

By LouisN

Last updated: October 28, 2026

The bonus lands in your account on a Friday, and by Monday the payslip has arrived with a deduction that looks like a mistake. You earned R14,800 more than usual and the tax went up by nearly R4,000. Colleagues who checked the same payslip heard the same explanation from payroll: “bonuses are taxed at a higher rate”. That sentence is false, and it is repeated in tea rooms across the country every December. There is no special bonus tax in South Africa.

What actually happens is arithmetic. PAYE is a pay-as-you-earn system that estimates your annual liability and collects it in instalments. A bonus, a 13th cheque or a commission payment breaks the assumption the monthly tables are built on, namely that this month looks like every other month. The employer has to work out what the extra money does to your whole year, and the answer is that the extra rand is taxed at your highest marginal rate, not at the average rate you see on your annual assessment.

This article sets out how that calculation works under the 2026/27 tax tables, why the deduction can look so much bigger than the rate you thought you paid, what commission-only earners should expect, and how to reproduce the number on your own payslip with a calculator and ten minutes. Every figure below is worked through with the SARS rates that apply from 1 March 2026 to 28 February 2027.

A bonus is not taxed at a special rate — it is taxed at your top rate

South Africa taxes individuals on a sliding scale. For the 2026/27 year the first R245,100 of taxable income is taxed at 18 percent, the next slice at 26 percent, then 31, 36, 39 and 41 percent, and anything above R1,878,600 at 45 percent. Each rate applies only to the slice of income inside its band. A person earning R500,000 does not pay 31 percent of R500,000; they pay 18 percent on the first R245,100, 26 percent on the next R138,000 and 31 percent on the last R116,900. Total tax comes to R116,237 before rebates, which is 23 percent of income, not 31 percent.

A bonus does not get its own scale. It is simply added to the top of the stack, which means every rand of it sits in the highest band you reach. That is why the deduction feels disproportionate: your average rate may be 15 percent, but the next rand you earn is taxed at 26, 31 or 36 percent, and the bonus is made entirely of next rands.

The primary rebate is the other half of the story. Every taxpayer under 65 receives a rebate of R17,820 against the tax calculated on annual taxable income, which is what creates the R99,000 tax-free threshold. Employers build the rebate into the deduction tables rather than applying it monthly, so it is already accounted for in your normal PAYE. It provides no cushion for a once-off payment.

The two arithmetic routes: the monthly table and the annual payment method

Payroll software works in one of two ways, and knowing which one your employer uses explains most of the confusion.

The first is the monthly table method. The employer treats the current month’s remuneration as representative: it annualises that figure by multiplying by twelve, calculates tax on the annual amount using the annual table, subtracts the rebate, and divides by twelve. In an ordinary month this reproduces the monthly deduction table exactly. In a bonus month it produces a deduction computed as though you earned that inflated amount every single month for a year.

The second is the annual payment method, which is the one SARS describes in its employer guide for employees’ tax. Irregular payments such as a bonus are separated from ordinary remuneration. The employer works out the tax on the annual equivalent of your ordinary pay, then the tax on the annual equivalent plus the annual payment, and the difference between those two tax figures is the PAYE on the bonus. The employee is not taxed on the annual equivalent itself, only on the pro-rata portion that represents what was actually received.

Both routes tax the bonus at the margin. The difference is that the annual payment method isolates the irregular amount so the rest of the month is not disturbed, while the blunt monthly-table approach recalculates your whole month on a hypothetical salary. Where income fluctuates badly, some employers use an averaging arrangement over the year under a SARS-approved basis, which smooths the monthly deduction and leaves the true-up to assessment. None of these methods changes your final liability. They change only when the money leaves your account.

Worked example: R28,000 a month and a R14,800 bonus

Take the illustration SARS itself uses in its employer guide, updated to the current tables. A monthly-paid employee under 65 earns R28,000 a month and receives a R14,800 bonus in October. Here is the annual payment method in full:

• Annual equivalent of salary: R28,000 x 12 = R336,000.
• Tax on R336,000: R44,118 plus 26 percent of the R90,900 above R245,100 = R67,752. Less the primary rebate of R17,820 = R49,932 a year, or R4,161 a month.
• Annual equivalent plus the bonus: R336,000 + R14,800 = R350,800.
• Tax on R350,800: R44,118 plus 26 percent of R105,700 = R71,600. Less the rebate = R53,780.
• Tax on the bonus alone: R53,780 – R49,932 = R3,848, which is exactly 26 percent of R14,800.

October’s PAYE is therefore R4,161 plus R3,848, a total of R8,009. The deduction nearly doubles while the gross pay rises by just over half. Nothing improper has happened: the bonus is taxed at 26 percent because that is the band the salary sits in, and the employee’s overall tax on R350,800 of income is R53,780, an average rate of 15.3 percent.

Worked example: R50,000 a month and a R120,000 bonus

At higher incomes the effect sharpens, because a large bonus pushes income across a bracket boundary. An employee earning R50,000 a month is on R600,000 a year. Tax on that is R125,599 plus 36 percent of the R69,800 above R530,200, which is R150,727, less the rebate, leaving R132,907 or R11,075.58 a month.

Add a R120,000 bonus and annual income becomes R720,000. Tax is R185,215 plus 39 percent of the R24,200 above R695,800, which comes to R194,653 less the rebate, or R176,833. The difference is R43,926 — 36.6 percent of the bonus, even though the employee’s average rate on total income is 24.6 percent and the top marginal rate is 39 percent. The bonus month deduction is R55,001.58 against a normal R11,075.58, which is the kind of line item that generates a phone call to the payroll department.

Why the deduction looks bigger than the marginal rate

Four things stack up, and together they explain almost every “my bonus was taxed at 40 percent” complaint.

• The bonus is taxed entirely at the margin. If your salary already reaches the 36 percent band, every rand of the bonus is taxed at 36 percent or more, while your average rate over the year might be 19 or 20 percent.
• The entire amount is taxed in one month. A R120,000 payment taxed at 36 percent produces a R43,926 deduction in a single payslip, which feels like a 40 percent month even though the annual rate is lower.
• The monthly table method inflates the base. Annualising a big commission month can push the whole month’s calculation into a higher band, so the deduction exceeds what the bonus alone justifies. The excess is recovered at assessment, not immediately.
• Nothing else moves to compensate. UIF stays at its cap, retirement deductions are unchanged, and there is no monthly share of the rebate to offset the jump.

There is also a timing effect that catches people who resign or retire mid-year. An employer paying out leave, notice or a pro-rata bonus applies the same annualisation against a part-year, and the annual equivalent is then pro-rated back to the months actually worked. The result is usually a larger deduction than the final assessment requires, which is why a refund often follows filing season.

13th cheques, leave pay and the December problem

A 13th cheque is legally just another annual payment, and it is treated identically whether your contract calls it a bonus, a 13th cheque or a festive-season payment. What changes the arithmetic is the timing. Because December is when many employers pay both a 13th cheque and a performance bonus, the two payments stack in the same month and push the annual equivalent over one or two bracket boundaries at once.

Leave pay is different in one respect: paid leave is ordinary remuneration and is simply part of the month’s pay. Leave paid out on termination is also remuneration, but the employer must perform a final calculation for the employee, and the annual equivalent is worked out over the pay periods actually worked rather than a full year. Severance benefits and retirement fund lump sums follow a completely separate table and are not PAYE at all, so a retrenchment package should never be compared with a bonus on the same basis.

Commission: the earner whose income is never the same twice

Commission is the hardest case, because for a commission-only earner the monthly table method has nothing stable to annualise. Each month is treated as if it were the whole year. A strong month is punished and a weak month is rewarded, and the year-end reconciliation does the correction.

Take an earner whose commission varies through the year: R20,000, R45,000, R12,000, R60,000, R30,000, R25,000, R18,000, R52,000, R21,000, R26,000, R40,000 and R15,000. Under the monthly table method a R60,000 month is annualised to R720,000, producing PAYE of R14,736.08 for that month; a R12,000 month is annualised to R144,000 and attracts R675. Total commission for the year is R364,000, on which the correct annual tax is R57,212. The monthly method would have collected R63,296 over the twelve months — R6,084 too much, refundable only once the assessment is done.

Employers who pay commission on top of a basic salary have it easier, because the basic salary provides the annual equivalent and the commission is handled as an irregular payment. In the R40,000-a-month case with a R25,000 commission month, the tax on the commission works out to R7,750, exactly 31 percent, and the month’s total PAYE is R15,434.75.

If you are commission-only, keep your own running total of gross earnings and PAYE deducted. The IRP5 your employer issues after the tax year, and the IT3(a) data SARS already holds, are built from those same twelve months, and comparing your running total with the assessment is the fastest way to spot a payroll error before it becomes a dispute.

What the payslip should show, line by line

A correct bonus-month payslip separates the irregular payment from ordinary pay, shows PAYE against the combined total, and keeps the statutory deductions in their own lines. UIF is one percent of remuneration for the employee, capped at a monthly earnings ceiling of R17,712, so the maximum employee contribution is R177.12 regardless of how large the bonus is. The employer contributes the same amount. Skills Development Levy is one percent of payroll payable by the employer only, and only once the annual payroll exceeds R500,000, so it should never appear as a deduction from your pay at all.

If the payslip shows a single gross figure with no split between salary, bonus and commission, ask for the breakdown. The split is not cosmetic: it is the record that supports the IRP5 and it determines whether the employer used the annual payment method or simply annualised the month.

How to check the figure yourself

You need three numbers: your annual taxable income before the bonus, the bonus itself, and the tax tables for the year in which the bonus is paid. Then:

• Multiply your monthly salary by twelve to get the annual equivalent.
• Calculate tax on that amount using the brackets, then subtract the primary rebate of R17,820.
• Add the bonus to the annual equivalent and calculate tax on the new total, again less the rebate.
• Subtract the first tax figure from the second. That difference is the PAYE on the bonus.
• Divide the first tax figure by twelve and add it back to get the total PAYE the month should show.

Check the result against the payslip. A difference of a few rand is rounding. A difference of hundreds of rand usually means the employer annualised the inflated month instead of isolating the bonus, or that a fringe benefit such as a company car or medical scheme contribution was included in remuneration without being reflected in the gross pay line. Both are worth a written query to payroll, quoting the two tax figures you calculated.

When the number is actually wrong

Over-deduction in a bonus month is normal and self-correcting. Under-deduction is the case that causes trouble later, because SARS assesses the year as a whole and will recover the shortfall with interest. The common causes are a mid-year change of employer where the new employer did not annualise from the correct starting point, a bonus paid without PAYE because it was mislabelled as a reimbursement, or a travel allowance where the 80 percent inclusion was not applied.

The remedy is the same in every case: file your return, check the IRP5 figures against your own records, and use the assessment as the final word. If the employer’s IRP5 is wrong, the correction has to come from the employer through a revised certificate, not from an adjustment you make on your own return. Keep the payslips and the bonus letter until the assessment for that year has been issued and any refund has landed.

The bottom line

A bonus is taxed at your marginal rate because it is added to the top of a year’s income, not spread across it. The deduction in that single month can be double your normal PAYE and still be perfectly correct. What matters is the annual picture: the total tax on your annual taxable income, compared with the PAYE collected over twelve months. If those two agree, the bonus month did its job. If they do not, the difference is either a refund waiting at assessment or a shortfall you should resolve before SARS finds it for you.