In short: SARS taxes a bonus or 13th cheque as an annual payment. Your employer works out your yearly salary, adds the bonus, and deducts the extra tax that the bonus causes. That means the bonus is taxed at your highest (marginal) tax rate, not at your average rate. So it feels heavily taxed, but it is not a special “bonus tax”. Check the figure on your payslip with your employer or SARS. This guide is not tax advice.
Sources: SARS: Rates of tax for individuals; SARS: Guide for Employers in respect of Employees’ Tax (2027).
How SARS taxes a bonus
SARS’s employer guide lists an annual bonus, an incentive bonus and merit awards as examples of annual payments. The PAYE method is:
- Work out the annual equivalent of your normal pay (for example, monthly salary x 12).
- Work out the tax on that annual equivalent.
- Add the bonus and work out the tax on the total.
- The difference between the two is the PAYE on your bonus.
Your normal monthly PAYE is still deducted as well, so the month you get your bonus shows a much bigger tax deduction.
Worked example (estimate)
This example uses SARS’s 2027 tax year rates (1 March 2026 to 28 February 2027) and the primary rebate of R17 820 for people under 65. It ignores retirement fund contributions, medical aid credits and other deductions, so your real figure will differ.
Thandi is under 65, earns R25 000 a month and gets a 13th cheque of R25 000 in December.
| Step | Calculation | Amount |
|---|---|---|
| Annual equivalent | R25 000 x 12 | R300 000 |
| Tax on R300 000 | R44 118 + 26% of (R300 000 minus R245 100) = R58 392, minus rebate R17 820 | R40 572 |
| Annual equivalent plus bonus | R300 000 + R25 000 | R325 000 |
| Tax on R325 000 | R44 118 + 26% of (R325 000 minus R245 100) = R64 892, minus rebate R17 820 | R47 072 |
| PAYE on the bonus | R47 072 minus R40 572 | R6 500 |
So about R6 500 of Thandi’s R25 000 bonus goes to PAYE (26%, her marginal rate), leaving roughly R18 500 before any other deductions. Her normal December PAYE comes off her salary on top of that. Someone in a higher bracket pays a higher share of the bonus.
Employers use SARS’s tax deduction tables, which can give slightly different rand amounts from a calculation straight off the rates table. For the full brackets and a monthly calculator, see our SARS tax tables 2026/27 and PAYE calculator.
13th cheque vs performance bonus
- 13th cheque: usually an extra month’s pay set out in your contract, often paid in November or December.
- Performance or incentive bonus: depends on your results or the company’s results, and the amount can change.
For PAYE, SARS treats both as annual payments, so the same method applies. Some employers spread the tax on a known bonus over the year instead of taking it all in one month. SARS’s guide allows this, which gives you a smaller tax hit when the bonus is paid.
What you will see on your payslip
- A separate line for the bonus or 13th cheque.
- A higher PAYE figure that month, covering normal salary tax plus bonus tax.
- On your IRP5 at year end, SARS’s code for an annual payment is 3605.
Your final tax is worked out when SARS assesses your return. If too much PAYE was taken over the year, the difference can come back as a refund.
Ways to use your bonus
- Pay off expensive debt first, such as store cards or short-term loans.
- Build an emergency fund in a savings account. Compare options in our online savings accounts guide.
- Save tax-free for the longer term. See our tax-free savings account comparison.
Thinking of a two-pot withdrawal on top of your bonus? That is taxed at your marginal rate too. See how much tax SARS takes from a two-pot withdrawal.
Confirm with your employer or SARS
- Ask payroll or HR how your bonus tax was calculated and whether it was spread over the year.
- Check your IRP5 when you get it, and your assessment on SARS eFiling.
- For questions about your own tax, use SARS’s official channels on sars.gov.za.
Last checked October 2026 against SARS’s 2027 tax year rates and rebates and SARS’s Guide for Employers in respect of Employees’ Tax (2027). The worked example is an estimate. Tax rules and your personal deductions affect the final amount. This is general information, not tax or financial advice.