Retirement annuity tax saving calculator
A retirement annuity lowers your taxable income, so SARS effectively pays part of your contribution. See how big that saving is at your income level, and how much deduction room you have left.
Your details
Estimated tax saving for the year
R12 960.00
Usually received as a refund on assessment, unless your employer deducts the RA through payroll
- Annual RA contribution
- R36 000.00
- Net cost after tax saving
- R23 040.00
- Unused deduction room
- R129 000.00
How we worked it out
- Annual taxable income before retirement deductionsR600 000.00
- 27.5% of incomeR165 000.00
- Annual capR430 000.00
- Total contributions (existing + RA)R36 000.00
- Deductible this yearR36 000.00
Lowest of contributions, 27.5% of income and the cap
- Tax without the RAR132 907.00
- Tax with the RAR119 947.00
- Tax savingR12 960.00
- Net cost of the RA contributionR23 040.00
Contribution minus tax saving
Why the saving depends on your income
Each rand you contribute comes off the top of your taxable income, which is taxed at your marginal rate. At 36% marginal tax, a R1 000 contribution costs you only R640 after tax. If you earn below the tax threshold, an RA does not save tax at all.
Using the limits well
The 27.5% limit applies to everything you put into retirement funds combined, including a workplace pension. The calculator shows how much room you have left this year, so you can top up before 28 February 2027 if you want to.
Frequently asked questions
How much can I deduct for retirement contributions in 2026/27?
Contributions to pension, provident and retirement annuity funds are deductible up to 27.5% of the greater of your remuneration or taxable income, with an overall cap of R430 000 a year. Budget 2026 raised the cap from R350 000.
What happens to contributions above the limit?
They are carried forward to the next tax year and treated as contributed then. They can also reduce tax on retirement lump sums or annuity income later, so they are not lost.
When do I get the tax saving?
If you pay the RA yourself, the saving usually comes as a refund when SARS assesses your tax return. If your employer deducts the RA through payroll, PAYE is reduced each month instead.
Does my employer's pension contribution count towards the limit?
Yes, if it is taxed as a fringe benefit on your payslip it counts as your own contribution. Include it under existing contributions.