2025/26 Budget Predictions: What to Expect
As the Finance Minister prepares to deliver the 2025/26 Budget Speech, South Africans are eager to know what lies ahead for the economy, taxes, and government spending. The upcoming budget is expected to strike a balance between economic recovery and financial sustainability, ensuring essential services remain funded while managing the country’s rising debt. However, debt management and economic recovery remain significant challenges.
Based on the 2024 Budget Review issued by National Treasury, here’s what we can expect.
Finding the Right Balance
We must appreciate that our government has a tough job ahead—reducing debt, funding growth initiatives, and improving tax collection—all while avoiding excessive borrowing. National Treasury is expected to prioritise financial stability by implementing key fiscal measures:
Reducing borrowing pressure and cutting interest costs through the planned use of R150 billion from the Gold and Foreign Exchange Reserve.
Increasing tax revenue collection by tightening compliance measures and closing loopholes, rather than raising tax rates.
Implementing strict spending controls, as public debt nears 75% of GDP, ensuring responsible fiscal management to prevent further economic strain.
Economic Outlook: A Slow but Steady Recovery
The economy is expected to grow at a modest rate. Key factors influencing economic performance include:
Energy stability with ongoing investment in power generation and infrastructure to curb electricity shortages.
Improvements in transport and logistics fixing inefficiencies at ports, railways, and major trade routes.
Inflation and interest rates careful monetary policies will be needed to manage rising costs while maintaining investor confidence.
Where Will the Government Spend?
The 2025/26 budget is expected to be around R2.5 trillion, with significant allocations in key areas:
Education with nearly 25% of the budget to fund schools, universities, and training programs.
Healthcare, ensuring hospitals, clinics, and medical staff are well-funded.
Social support grants for pensions, child support, and unemployment assistance make up 60% of non-interest spending.
Infrastructure and job creation with R943 billion allocated to public infrastructure such as roads, energy projects, and water systems.
Infrastructure & Economic Reforms
Driving long-term growth, the budget is expected to focus on major infrastructure projects, including:
Eskom and energy sector reforms with continued private sector participation in power generation to stabilise electricity supply.
Freight and logistics upgrades by allowing private investment in rail and port operations.
Water and sanitation projects should receive increased spending to ensure stable water supply and prevent shortages.
Digital expansion with over R40 billion is set aside for telecommunications, including better internet access and mobile network expansion.
Tax Predictions: Will You Pay More?
While outright tax hikes seem unlikely, the way taxes are applied could change. Here’s what to expect:
Personal income tax brackets won’t be adjusted for inflation, meaning you might pay more tax as your salary increases.
‘Sin taxes’ on alcohol and tobacco are expected to rise between 4.7% and 8.2%.
The fuel levy should remain unchanged.
Corporate tax rates will likely remain unchanged, but tax compliance enforcement will be strengthened.
A global minimum corporate tax of 15% will be implemented. Read more about this new tax in our recent article.
Tax incentives for renewable energy and electric vehicle manufacturing could be extended to support green industries.
VAT relief on essential food items is being considered to ease the cost of living for lower-income households.
What Does This Mean for You?
If you earn a salary, expect higher effective tax rates due to bracket creep.
If you receive social grants, expect inflation-linked adjustments.
If you own a business, tax incentives for sustainable energy investments could offer new opportunities that are important to explore.
