Business
The 2026 Budget could quietly cost you more than you think
As South Africans wait for the National Budget on 25 February, there is one phrase doing the rounds in finance circles again: bracket creep.
It sounds technical. Almost harmless. But for many households already stretching every rand, it could be the difference between feeling slightly ahead this year or quietly falling behind.
The silent squeeze on your payslip
Tax specialists are warning that bracket creep may once again become one of the National Treasury’s more discreet revenue tools.
Kristof Kruger, senior fixed income trader at Prescient Securities, says the pressure is already building. If tax brackets are not adjusted in line with inflation, people effectively pay more tax in real terms, even though their buying power has not improved.
On paper, you might get a five percent salary increase to match inflation. In reality, if tax thresholds stay largely unchanged, part of that increase shifts you into a higher tax band. The result: your payslip grows, but your lifestyle does not.
Lance Collo, a chartered accountant and tax adviser, puts it bluntly. Inflation becomes the government’s most effective revenue tool. You earn more on paper, yet you take home less in real terms. There is no headline announcing a tax hike. No dramatic policy change. Just a subtle shift in numbers.
This is why bracket creep is often described as fiscal drag. Quiet. Invisible. Highly effective.
Why middle-income earners feel it most
For many middle-class families in Joburg and across the country, this is not just theory. It is the weekly grocery shop that feels heavier. The school fees debit order that bites harder. The petrol tank that never seems to stretch as far.
Hayley Parry, co-founder of Cumulate and head of financial education at Worth, says the country’s fiscal strain mirrors what households are facing at home. When a country spends more than it earns, it borrows. When families do the same, they rely on credit. In both cases, tomorrow pays for today.
South Africa’s household savings rate has hovered near zero for years. Parry describes this not as irresponsibility but as a structural red flag. Even with interest rates easing and inflation moderating, many consumers feel little real relief. Any benefit from lower rates can be quietly cancelled out by bracket creep.
Middle-income earners are especially exposed. A cost-of-living adjustment that merely keeps pace with inflation can still push them into higher tax territory.
Easy wins for the fiscus?
Some tax specialists expect the government to rely on what are often seen as predictable levers.
Shaheed Patel and Dehal Jivan from CMS South Africa say traditional “easy wins” could include increases in fuel levies, Road Accident Fund levies, and sin taxes on alcohol and tobacco. Another likely move would be not fully adjusting personal income tax bands for inflation, which would effectively raise the tax burden without changing the headline rates.
Samuel Seeff, chairman of the Seeff Property Group, believes the Budget should focus on growth rather than simply balancing the books. He argues that households and businesses need breathing room, not additional strain on what he calls the inverted pyramid of the tax base.
A rare chance for relief?
Not everyone expects bad news.
The Bureau of Economic Research has suggested that the 2026 Budget could turn into a good news event. Lower borrowing costs, firmer growth, restrained spending, and a stronger-than-expected commodities windfall may improve the fiscal position.
If that materialises, it could allow the National Treasury to meet debt targets and possibly even offer some relief from bracket creep for the first time in several years.
Citadel chief economist Maarten Ackerman anticipates a relatively steady approach. He expects the usual adjustments to address bracket creep, no major changes to personal or corporate tax rates, and potentially sharper increases in sin taxes.
What it means for you
For ordinary South Africans, bracket creep is not an abstract policy debate. It is about whether your salary increase translates into real progress or simply keeps you standing still.
As Budget Day approaches, many will be watching not only for headline tax rates but also for what happens quietly in the tables beneath them. Because sometimes, the most powerful tax changes are the ones you barely notice until your money stops stretching.
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Source: IOL
Featured Image: Freepik
