How Your RA Can Save You Thousands in Tax This Year
Ayanda Mokoena · Tax Chommie Editorial · 27 Jan 2026
A retirement annuity is one of the few tax deductions ordinary South Africans have real control over — you decide how much to contribute, and unlike most deductions, the benefit scales with how much you're prepared to save. Here's exactly how the math works.
The deduction limit
Contributions to a retirement annuity (combined with any pension and provident fund contributions) are deductible up to 27.5% of the greater of your remuneration or taxable income, capped at R350,000 per year. Anything above that limit doesn't disappear — it carries forward and can be deducted in a future tax year, or used to reduce capital gains tax on withdrawal later.
Why it's worth more than it looks
Because an RA contribution is a deduction (unlike the medical credit, which is a flat rebate), its value depends on your marginal tax rate — the rate on your last rand of income. The higher your bracket, the more a rand of RA contribution actually saves you.
Worked example
Say you earn R30,000/month (R360,000/year) and fall in the 26% marginal bracket. If you contribute R2,500/month to an RA (R30,000/year — well within the 27.5% limit), that entire amount is deducted from your taxable income before tax is calculated.
At a 26% marginal rate, that's a tax saving of roughly R7,800 for the year — money you'd otherwise have paid to SARS, effectively redirected into your own retirement savings instead. Someone in the 39% bracket contributing the same R30,000 would save roughly R11,700 — the same contribution, a bigger tax benefit, purely because of where it sits in their income.
A common misunderstanding
People sometimes assume the RA deduction is capped at a flat rand amount regardless of income. It isn't — the R350,000 cap only becomes the binding constraint at fairly high income levels; for most taxpayers, the 27.5%-of-income rule is what actually limits how much you can deduct.
What to keep
Your RA provider issues an annual tax certificate (usually available from around March/April) showing your total contributions for the tax year — this is the document that matters for your return, not your monthly statements. If you increased or started a new RA contribution partway through the year, make sure the certificate reflects the correct total; providers occasionally issue a corrected certificate if contributions changed mid-year.
Upload your RA certificate to Tax Chommie and the deduction is calculated automatically against the 27.5%/R350,000 limit — including a check for whether you're already close to the cap once your pension and provident fund contributions are factored in too.