How the RA tax calculator works
Last updated 9 November 2026
A retirement annuity (RA) is a retirement savings product you can own on your own, whether or not you belong to a fund at work. SARS lets you deduct what you pay into an RA before it works out your income tax. So every rand you put in lowers your taxable income, and that lowers your tax.
The calculator works out your income tax for the 2026/27 tax year twice: once without the RA and once with it. It uses the same SARS tax tables as our take-home pay calculator. The difference between the two is your tax saving.
The deduction has a limit. All your retirement contributions together, including what goes into a pension or provident fund at work, can be deducted up to 27.5% of your income, and no more than R 430 000 a year. The calculator takes your existing contributions into account, so it only counts the part of your RA that still fits under the limit.
It also shows the real cost of the RA: what you pay in, less the tax you get back. Finally, it projects what your contributions could grow to by the time you retire, at the return you choose.
Worked example
Say you earn R 600 000 a year, you are under 65, you have no retirement fund at work, and you start an RA of R 3 000 a month. These are the calculator’s starting values.
- Without the RA, your taxable income is R 600 000 and your tax for the year is R 132 907.
- With the RA you contribute R 36 000 a year. That is well under your limit of R 165 000, so all of it is deductible.
- Your tax drops to R 119 947, a saving of R 12 960.
- That saving equals your marginal rate of 36% on the R 36 000 you put in, because every rand of the deduction comes off the top of your income.
- The RA really costs you R 1 920.00 a month, not R 3 000.
- At 9% a year for 30 years, your contributions of R 1 080 000 could grow to about R 5 492 230.
Now take someone earning R 450 000 who already puts R 48 000 a year into a pension fund at work. Their limit is R 123 750, so they can add up to R 6 312.50 a month to an RA and still get the full deduction. An RA of R 24 000 a year saves them R 7 185 in tax.
What the figures mean
- Tax you save is the drop in your income tax for the year. Higher earners save more per rand, because their marginal rate is higher. Rates run from 18% to 45%.
- Real cost a month is your contribution less the tax saving, spread over the year. It is the amount your RA really takes out of your pocket.
- Most you can deduct a month is what is left of your yearly limit after your existing contributions, divided by 12. Contributions above it get no deduction this year.
- Projected value is what your RA contributions could grow to, with growth at the rate you chose and no fees. Real returns go up and down, and fees reduce growth.
- The what-if table shows the tax saved and the real cost at different monthly amounts, up to the most you can deduct.
Things to watch
- You can’t take money out of an RA before age 55, except in a few cases such as emigration or a small fund value. The two-pot system allows limited withdrawals from the savings part, which are taxed.
- At retirement, most of the money must buy an income (an annuity), and only part can be taken as cash. Both are taxed under the retirement tax tables.
- Contributions over the limit are not lost. They carry forward to later years and can reduce tax on your retirement benefits.
- If you earn less than R 99 000 a year and are under 65, you pay no income tax, so an RA saves you no tax now.
- Fees matter over long periods. Compare total costs before you sign up, and check what the fund may invest in.
- The calculator leaves out medical aid tax credits. They don’t change with your RA, so the saving is the same.
Sources
The tax tables and rebates come from the rates SARS publishes for the 2026/27 tax year. The deduction limit of 27.5%, capped at R 430 000, comes from the Budget 2026 changes. All figures were last checked on 9 November 2026, and the full list of sources is at the bottom of this page.