i What this page covers
The two SARS tables that tax a lump sum from a pension, provident or retirement annuity fund. The retirement table applies on retirement, death and retrenchment (severance benefits share it): the first R550,000 is tax free over your lifetime, then 18%, 27% and 36%. The withdrawal table applies when you cash out on resignation, dismissal or divorce before retirement: only the first R27,500 is tax free, and the brackets start far lower. Both tables aggregate every lump sum you have ever taken, so the tax on this one depends on the ones before it.
The comparison table shows the tax on the same amount under each route, which is usually the deciding number when someone changes jobs. For your own figures, including earlier lump sums, the Retirement Lump Sum Tax Calculator runs both tables.
| Cumulative lump sums | Rate of tax |
|---|---|
| R0 to R550,000 | 0% |
| R550,001 to R770,000 | 18% of the amount above R550,000 |
| R770,001 to R1,155,000 | R39,600 + 27% of the amount above R770,000 |
| R1,155,001 and above | R143,550 + 36% of the amount above R1,155,000 |
| Cumulative lump sums | Rate of tax |
|---|---|
| R0 to R27,500 | 0% |
| R27,501 to R726,000 | 18% of the amount above R27,500 |
| R726,001 to R1,089,000 | R125,730 + 27% of the amount above R726,000 |
| R1,089,001 and above | R223,740 + 36% of the amount above R1,089,000 |
| Lump sum | Tax at retirement or retrenchment | Effective rate | Tax on withdrawal | Effective rate |
|---|---|---|---|---|
| R100 000 | R0 | 0.0% | R13 050 | 13.1% |
| R200 000 | R0 | 0.0% | R31 050 | 15.5% |
| R300 000 | R0 | 0.0% | R49 050 | 16.4% |
| R400 000 | R0 | 0.0% | R67 050 | 16.8% |
| R500 000 | R0 | 0.0% | R85 050 | 17.0% |
| R550 000 | R0 | 0.0% | R94 050 | 17.1% |
| R600 000 | R9 000 | 1.5% | R103 050 | 17.2% |
| R700 000 | R27 000 | 3.9% | R121 050 | 17.3% |
| R770 000 | R39 600 | 5.1% | R137 610 | 17.9% |
| R850 000 | R61 200 | 7.2% | R159 210 | 18.7% |
| R1 000 000 | R101 700 | 10.2% | R199 710 | 20.0% |
| R1 155 000 | R143 550 | 12.4% | R247 500 | 21.4% |
| R1 500 000 | R267 750 | 17.8% | R371 700 | 24.8% |
| R2 000 000 | R447 750 | 22.4% | R551 700 | 27.6% |
| R3 000 000 | R807 750 | 26.9% | R911 700 | 30.4% |
| R5 000 000 | R1 527 750 | 30.6% | R1 631 700 | 32.6% |
| Lump sums taken before | This lump sum | Tax on this lump sum | Tax-free portion still available |
|---|---|---|---|
| R0 | R400 000 | R0 | R550 000 |
| R150 000 | R400 000 | R0 | R400 000 |
| R300 000 | R400 000 | R27 000 | R250 000 |
| R550 000 | R400 000 | R88 200 | R0 |
| R800 000 | R400 000 | R112 050 | R0 |
How these figures work
SARS does not tax each lump sum on its own. It adds every lump sum you have received since October 2007 (retirement and severance) and March 2009 (withdrawals), calculates the tax on the total using the table that applies to the current benefit, and subtracts the tax that would have applied to the earlier total. The result is that the R550,000 tax-free portion is a lifetime amount: a withdrawal at 35 that uses R300,000 of it leaves R250,000 at 65.
The withdrawal table's lower thresholds are deliberate policy to discourage cashing out. Under the two-pot system, withdrawals from the savings component are different again: they are taxed at your marginal income tax rate and do not use these tables or the R550,000. The two-thirds of a pension or RA fund that must buy an annuity is taxed as income when the annuity pays, not on these tables.
★ A worked example
A R900,000 lump sum taken at retirement with no earlier lump sums: R550,000 is tax free, the next R220,000 is taxed at 18% (R39,600), and the remaining R130,000 at 27% (R35,100), for R74,700 in total, an effective rate of 8.3%. The same R900,000 taken as a withdrawal on resignation: R27,500 tax free, R698,500 at 18% (R125,730), and R174,000 at 27% (R46,980), for R172,710, or 19.2%. Preserving to retirement saves R98,010.
✕ Common mistakes
- Treating R550,000 as per lump sum. It is per lifetime, shared with severance benefits and reduced by earlier withdrawals.
- Cashing out on resignation to "get the money now" without pricing the withdrawal table. On R900,000 the difference is close to R100,000.
- Mixing up two-pot savings withdrawals with these tables. Savings component withdrawals are taxed at your marginal rate.
- Forgetting that a retrenchment package uses the same R550,000 as your eventual retirement lump sum.
- Assuming the fund pays the tax. The fund applies for a tax directive and SARS deducts the tax before payment; the net amount is what you receive.
Notes on reading these figures
The tables are set in the Income Tax Act and were last changed with effect from 1 March 2023; they were unchanged in the 2024, 2025 and 2026 budgets. Provident fund balances accrued before 1 March 2021 can still be taken in full as a lump sum; pension and RA members are limited to one third unless the fund value is R165,000 or less.
Terms used on this page
See also: Crypto Exchange Fees in South Africa.
Frequently asked questions
How much of a retirement lump sum is tax free in South Africa?
R550,000 over your lifetime under the retirement table, which covers retirement, death and retrenchment. Earlier retirement, severance and withdrawal lump sums reduce it.
How is a resignation withdrawal taxed?
On the withdrawal table: R27,500 tax free, then 18% to R726,000, 27% to R1,089,000 and 36% above that, cumulative over your lifetime.
Does a retrenchment package use the R550,000?
Yes. Severance benefits are taxed on the retirement table and share the lifetime tax-free portion with your eventual retirement lump sum.
Are two-pot withdrawals taxed on these tables?
No. Savings component withdrawals are added to your income and taxed at your marginal rate. They do not reduce the R550,000.
Can I take my whole fund as a lump sum?
From a provident fund, balances accrued before 1 March 2021 can be taken in full. Pension and RA funds and post-2021 provident contributions are limited to one third as a lump sum unless the total is R165,000 or less; the rest buys an annuity.
Did the 2026 budget change these tables?
No. The tables have been unchanged since 1 March 2023.
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