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Let’s unpack the key changes and what they mean for consumers:
One of the most notable changes is the increase in Value-Added Tax (VAT), which will rise from 15% to 15.5% on May 1, 2025, with another 0.5% increase coming in 2026.
For consumers, this means everyday goods and services will become more expensive — from electricity and clothing to transport and personal care products.
While basic food items remain VAT-exempt and more items were added to VAT-exempt, the reality is that many essentials will see price hikes, adding further strain to household budgets.
This increase will hit low- and middle-income earners the hardest, as VAT is a regressive tax—meaning it takes a bigger proportion of income from the poor than from the wealthy.
While there is no direct increase in personal income tax rates, the government has not adjusted tax brackets for inflation. This means that as salaries rise due to inflation, many South Africans will be pushed into higher tax brackets, effectively paying more tax without actually earning more in real terms.
Middle-class and working professionals will feel the impact the most, as their take-home pay shrinks despite salary increases.
In a small win for motorists, the general fuel levy and the Road Accident Fund (RAF) levy will remain unchanged for another year, continuing the freeze introduced in 2022.
This move provides around R4bn in tax relief, preventing an even bigger fuel price hike.
For those who drink or smoke, the budget brings another annual increase in excise duties:
The government justifies these increases as a public health measure while raising revenue. However, for consumers, this means that drinking and smoking will take an even bigger chunk of their budgets.
Millions of South Africans depend on social grants. While grant payments will increase slightly, they may not keep up with food inflation, meaning beneficiaries will still struggle to afford essentials as prices continue to rise.
The government is allocating R19.2bn to the Passenger Rail Agency of South Africa (PRASA) to improve train services, alongside an additional R11.8bn for infrastructure projects.
If these funds are managed efficiently, commuters could benefit from better, cheaper transport options. However, given past mismanagement of infrastructure budgets, accountability will be key to ensuring that South Africans see improvements.
Given these changes, South Africans must adapt their financial strategies. Here’s what consumers can do:
While the government has made some strategic investments, this budget largely increases the financial burden on South Africans through higher VAT, unchanged tax brackets, and rising sin taxes.
For the economy to grow sustainably, South Africa must prioritize job creation, economic growth, and efficient public spending—or risk placing even greater strain on consumers in the years ahead.