Heavy Reliance on Top Earners as 3% Pay 33% of Income Tax

A very small fraction of South Africa’s taxpayer population is responsible for an outsized portion of the country’s total personal income tax collections, with the concentration becoming even more pronounced among the highest income brackets.

Key Takeaways

• A Small Group Funds a Large Share of Revenue: A relatively limited number of high-income earners contribute the majority of South Africa’s personal income tax, making the fiscus heavily dependent on top brackets.
• The Tax Base Is Narrower Than It Appears: Although 26 million individuals are registered, only about 7 million are assessed for income tax, significantly concentrating the burden.
• High Earners Play a Critical Fiscal Role: Around 12.5% of taxpayers earning above R750 000 per year account for nearly 60% of personal income tax collections, highlighting structural reliance on upper-income groups.

Heavy Concentration of Personal Income Tax Among High Earners

Personal Income Tax remains the single largest source of revenue for the South African government, contributing close to 40% of all funds collected for the national fiscus each year. This heavy reliance on individual earners underscores the importance of employment, wage growth and compliance within the formal economy.

South Africa currently has roughly 26 million individuals registered on the tax system. However, a significant proportion of these registered individuals do not actually pay personal income tax, primarily because their earnings fall below the annual tax threshold or they have no taxable income during the assessment period.

In practical terms, only about 7 million individuals are formally assessed for income tax each year. Within this smaller group of assessed taxpayers, the overwhelming share of total collections originates from those in the upper income brackets.

Approximately 12.5% of assessed individual taxpayers who earn more than R750 000 per annum are responsible for nearly 60% of all personal income tax collected. This reflects a highly concentrated revenue structure in which a relatively limited segment of higher earners shoulders a substantial portion of the national tax burden.

This translates to around 980,000 taxpayers out of the broader base of 26 million registered individuals contributing the majority of personal income tax revenue.

Distribution of Personal Income Tax by Income Bracket

The imbalance becomes even more striking at the top end of the income spectrum. Individuals earning R1.5 million or more annually account for 32.7% of total personal income tax payable, despite representing only 2.9% of assessed taxpayers.

The following table provides a simplified breakdown of this concentration:

Income Level	% Of Assessed Taxpayers	% Of PIT Contribution
Above R750 000 per year	12.5%	~60%
Above R1.5 million per year	2.9%	32.7%

In most emerging markets, the top 10% of earners typically contribute between 40% and 50% of personal income tax, placing South Africa among the more top-heavy systems globally.

This growing dependence on high-income earners to fund public expenditure has triggered concern among economists, policy specialists and tax practitioners, who have identified two primary structural risks within the system.

Structural Risks Facing the Tax Base

Ageing High-Income Taxpayers

The first risk relates to demographic composition. A significant portion of individuals within these high-income brackets belongs to an ageing cohort. With persistently elevated youth unemployment levels, the pipeline of younger earners entering higher tax brackets remains constrained.

South Africa’s overall unemployment rate stands at approximately 31.9%, while youth unemployment hovers around 40%. These figures indicate that a substantial segment of the working-age population is either unemployed or economically inactive, limiting expansion of the formal tax base through Pay-As-You-Earn contributions.

High unemployment among younger citizens restricts the natural broadening of the tax base and increases vulnerability to fiscal shocks in future years.

Emigration of High Earners

The second major concern centres on the increasing mobility of high-income earners. Emigration has emerged as a material risk factor, particularly as tax policy and compliance enforcement intensify.

Highly skilled and financially mobile individuals who relocate abroad for professional or lifestyle reasons may formally cease South African tax residency, thereby reducing future revenue collections.

According to the 2025 Tax Statistics bulletin, more than 51,500 individuals declared cessation of South African tax residency between the 2017 and 2024 tax years.

Over the last four years, individuals aged between 18 and 44 accounted for an average of 61% of those who formally severed tax ties each year. This age grouping is widely regarded as one of the most economically productive segments of the population.

SARS has acknowledged that the departure of these taxpayers removes a highly productive and skilled segment from the domestic tax base annually.

SARS and President Ramaphosa’s 2026 Challenge

The 2025 Budget, along with updates from the South African Revenue Service and President Cyril Ramaphosa’s most recent State of the Nation Address, emphasised that expanding the tax base remains a central objective of government policy.

However, authorities have conceded that broadening the base in the current economic climate presents considerable challenges.

During an early February visit to SARS, President Ramaphosa acknowledged that revenue collection is becoming increasingly complex, both domestically and internationally. Slower economic growth and elevated living costs are exerting pressure on the taxable base.

SARS Steps Up Compliance and Enforcement

In response, SARS has intensified its compliance and enforcement strategies and is expected to continue strengthening these efforts in the current financial year.

Key focus areas include:

• Expanded third-party data partnerships to gather financial information
• Increased scrutiny of trusts and their beneficiaries
• Enhanced monitoring of alternative and emerging trades such as cryptocurrency
• Systematic identification and registration of individuals and businesses operating outside the formal tax system

National Treasury has allocated additional billions of rands to bolster SARS’s operational and technological capabilities.

Fiscal Sustainability Depends on Broader Economic Reform

Minister of Finance Enoch Godongwana has consistently stated that improving administrative efficiency and broadening the tax base will enable government, over time, to distribute the tax burden in a more balanced and equitable manner.

The estimated net revenue target for the current financial year stands at approximately R2 trillion. As the 2026 Budget approaches, both SARS and taxpayers are likely to face renewed scrutiny and heightened fiscal pressure.

When a small percentage of taxpayers contribute a large share of revenue, fiscal stability becomes closely linked to economic growth, labour market reform and confidence among high-income earners.

In this context, the sustainability of South Africa’s public finances will increasingly depend not only on stronger compliance, but also on policies that stimulate employment, retain skills and encourage inclusive economic expansion across all income levels.

Conclusion

South Africa’s personal income tax structure highlights a clear and growing dependence on a relatively small segment of high-income earners to fund a significant portion of government expenditure. While this reflects a progressive tax system in design, it also exposes the fiscus to concentration risk, particularly in the face of slow economic growth, high unemployment and increasing taxpayer mobility. Broadening the tax base through stronger economic expansion, improved employment outcomes and enhanced compliance will be essential to ensuring long-term fiscal sustainability and reducing vulnerability to revenue shocks.