5 ways to reduce your 2025 tax contribution

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That’s right, it’s already time to start thinking about your 2025 tax contribution. As we know, government wants to bleed each and every citizen dry with a proposed 1% VAT increase over two years. So, here’s what you can do legally to reduce your 2025 tax contribution and safeguard your wealth.

The next tax season opens in the middle of July, with the deadline for individual (non-provisional) taxpayers typically falling in October (although unconfirmed). Everyone’s tax affairs differ, of course. Nevertheless, thanks the experts at TaxTim, here are the five most effective ways to legally reduce your 2025 tax contribution.

REDUCE YOUR 2025 TAX CONTRIBUTION

Tax-Free Saving Accounts (TFSAs) should be top of your list in the 2025. Image: File

First and foremost on your saving scheme needs to Tax-Free Saving Accounts (TFSAs). You’re taxed on earnings from any investments you have. However, the South African Revenue Service (SARS) typically under-taxes these throughout the year. Meaning you might end up with a healthy refund owed when it comes time to submit your tax return. All major financial institutions offer TFSAs (within limits). Investec, Santam, Discovery, Standard Bank, Old Mutual all have their own products, typically comprised of a combination of unit trusts, fixed deposits, bonds and other financial products. When you withdraw funds from this type of investment, guess what, it’s tax free up to these limits:

R36 000 per tax year.
Lifetime limit of R500 000.

RETIREMENT ANNUITIES

You need to get your tax affairs in order for July 2025, with return submissions in October. Image: File

Next on your 2025 tax contribution hit-list needs to be Retirement Annuities (RAs). Contributions towards any pension/provident/RA is tax deductible up to a limit of 27.5% of your taxable income (maximum of R350 000 per year). Don’t worry if that sounds a little complicated. What you need to know is if you ever have excess cash, simply top-up your RA to save on tax. You are also permitted as many RAs as you like over and above any pension fund contributions by your employer. Note that you can only access these retirement funds when you turn 55-years old.

BE CHARITABLE

A contribution to a non-profit or Public Benefit Organisation (PBO) has special tax-free approval from SARS. These organisations will be involved in healthcare, education, poverty alleviation, housing, conservation, environmental and culture. Contributions to registered PBOs are tax deductible up to a limit of 10% of your taxable income. Click HERE to find all SARS-approved PBOs.

LOG ALL YOUR WORK TRAVEL

Legally safeguarding your wealth from government is within your means if you know what to do. Image: File

If you receive a travel allowance, keeping concise logs is a great way to reduce your 2025 tax contribution. Otherwise known as a fringe benefit, SARS will waive 80% of your travel allowance for tax purposes. Check out TaxTim’s handy Travel Deduction Calculator HERE for more.

JOIN A MEDICAL AID

If you contribute to a Medical Aid throughout the year you receive a fixed monthly tax credit. You get this as the primary member, plus further credits for every dependent thereafter. SARS calls this the Medical Schemes Fees Tax Credit.