How to pay less tax on your bonus?
The most effective way to pay less tax on your bonus is by using a portion of your bonus and investing it in a retirement annuity.
Why? Contributions to retirement annuities are tax deductible. That means that the amount of money you contribute to your retirement annuity reduces your taxable income. As a result, you pay less tax.
Here is a calculator that shows you how much tax you would pay on your bonus if you contributed part of your bonus to a retirement annuity:
Bonus + Retirement annuity contribution calculator - updated for 2024/25 tax year
R
Here is what happens to your bonus after tax, depending on how much you contribute to your retirement annuity:
You pay tax on any bonuses received. The bonus is added to your taxable income for the year.
The most effective way to reduce the tax you pay on your bonus is by investing a portion of your bonus in a retirement annuity.
The most effective way to reduce the tax you pay on your bonus is by investing a portion of your bonus in a retirement annuity.
- If you use 0% of your bonus to invest in your RA - you pay tax of R0.0 on the bonus. Leaving you with an effective bonus of R40.0k after tax.
- If you use 25.0% of your bonus to invest in your RA - you pay tax of R0.0 on the bonus. Leaving you with an effective bonus of R40.0k after tax.
- If you use 37.5% of your bonus to invest in your RA - you pay tax of R0.0 on the bonus. Leaving you with an effective bonus of R40.0k after tax.
Sources: