How Much Interest Is Tax-Free in South Africa? The R23,800 Exemption Explained (2026/27)
Prices and facts checked 16 October 2026. We don't accept payment for rankings.
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Short answer: in 2026/27, the first R23,800 of South African interest you earn in a tax year is tax-free if you're under 65, and the first R34,500 if you're 65 or older. Interest above that is added to your taxable income and taxed at your marginal rate. Interest earned inside a tax-free savings account doesn't count towards the limit at all (National Treasury Budget 2026 tax guide; SARS tax-free investments).
General information, not tax or financial advice. Interest rates and your other income determine whether you'll owe tax on interest. Check your bank's IT3(b) certificate against your return.
The exemption at a glance (2026/27)
| Under 65 | 65 and older | |
|---|---|---|
| Tax-free South African interest per year | R23,800 | R34,500 |
| Interest inside a tax-free savings account | Doesn't count | Doesn't count |
| Interest above the exemption | Taxed at your marginal rate | Taxed at your marginal rate |
Source: Treasury Budget 2026 tax guide. These amounts haven't changed for several years, so inflation slowly erodes their value.
How much savings does that cover?
The exemption is about interest, not your balance. At different interest rates, this is roughly how much you can hold before you pay tax on interest (simple arithmetic, interest ÷ rate):
| Interest rate | Balance that earns R23,800 a year (under 65) | Balance that earns R34,500 a year (65+) |
|---|---|---|
| 6% | about R397,000 | about R575,000 |
| 7.5% | about R317,000 | about R460,000 |
| 9% | about R264,000 | about R383,000 |
With the repo rate raised to 7.25% in September 2026 (Moneyweb), savings rates have risen too, so you reach the exemption with a smaller balance.
What counts as "interest"
- Interest on savings accounts, fixed deposits, notice deposits and money market accounts at South African banks
- Interest portions of income funds and money market unit trusts
- RSA Retail Savings Bonds
What doesn't count towards the limit:
- Interest inside a tax-free savings account (TFSA) is fully exempt and separate (SARS).
- Dividends aren't interest. Dividends tax of 20% is usually withheld at source (Treasury tax guide).
- Foreign interest doesn't qualify for the local exemption.
Worked example
Lerato is 40 and earns a R420,000 salary. She has R400,000 in a fixed deposit at 8%, which earns R32,000 of interest a year.
- Exempt: R23,800
- Taxable interest: R32,000 − R23,800 = R8,200
- Her marginal rate is 31% (taxable income of R383,101 to R530,200 in the SARS 2026/27 tax table), so the tax is about R2,542.
If she'd used her R46,000 TFSA allowance for part of that money, the interest on that portion would be tax-free and wouldn't use up her R23,800. See our best tax-free savings accounts.
Do you have to file a tax return because of interest?
Interest can trigger a filing obligation. Under the 2026 filing notice, you didn't need to file if your income was only a salary (up to R500,000 from one employer) plus local interest of up to R23,800 (under 65) or R34,500 (65 and older), not counting TFSA interest (Moonstone on the SARS notice). If your interest is higher, you'll generally need to file. Large amounts of interest can also make you a provisional taxpayer. See our provisional tax guide.
Ways to use the exemption well
- Fill your TFSA first for long-term savings, up to R46,000 a year and R500,000 in your lifetime (SARS).
- Split savings between spouses. Each person gets their own R23,800 exemption, as long as the money genuinely belongs to them.
- Watch fixed deposits that pay out at maturity. Interest is taxed in the tax year it's paid or accrues, so a 5-year deposit that pays all its interest at once can push you over the limit in one year.
- Check your IT3(b) certificates. Banks report your interest to SARS, and it's usually pre-filled on your return.
FAQ
How much interest is tax-free in 2026?
R23,800 a year if you're under 65, and R34,500 if you're 65 or older, on South African interest.
Does interest from a tax-free savings account count towards the R23,800?
No. TFSA interest is fully exempt and doesn't use up the annual interest exemption.
What tax rate applies to interest above the exemption?
Your marginal income tax rate, from 18% to 45%, because the interest is added to your taxable income.
Do I need to declare interest if it's under R23,800?
Banks report it to SARS and it's usually pre-filled. If you file a return, check that it's included.
Are dividends included in the interest exemption?
No. Dividends are separate, and dividends tax of 20% is usually withheld before you receive them.
Sources
Pages we used for this article, checked on or before the update date above.
- National Treasury Budget 2026 tax guide · treasury.gov.za
- SARS tax-free investments · sars.gov.za
- Moneyweb · moneyweb.co.za
- SARS 2026/27 tax table · sars.gov.za
- Moonstone on the SARS notice · moonstone.co.za
Changelog: 16 Oct 2026, first published with 2026/27 figures.