โ† All answersPayslips & PAYE

How is a 13th cheque or bonus taxed?

A bonus is taxed as ordinary income, but because PAYE annualises the month it falls in, the deduction on that payslip looks far heavier than your usual rate.

There is no separate bonus tax rate in South Africa. A 13th cheque is ordinary remuneration and is taxed at your marginal rate like any other income. What makes it feel punitive is the mechanics of PAYE rather than the rate.

Because your employer annualises the month a bonus falls in, a December payslip carrying both a salary and a bonus gets projected as though you will earn that combined amount every month. That projection lands in a higher bracket, so the tax withheld on the bonus can be much higher than your usual effective rate.

The correct amount is settled on assessment. If too much was withheld across the year, it comes back as a refund. That is cold comfort in December, but it does mean the money is not lost.

Two things genuinely reduce the tax rather than defer it. Contributing part of the bonus to a retirement annuity reduces taxable income, subject to the 27.5% and R350,000 annual limits. And where a bonus is paid across two tax years by agreement, each portion is annualised separately. Both are worth raising before the payment is processed, not after.

General information about South African rules as they stood on 2026-08-23. It is not tax or legal advice and it knows nothing about your circumstances. Where your situation turns on facts not covered here, speak to a registered tax practitioner or a labour lawyer.

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