Retirement Lump Sum Tax Tables 2026
These are the official SARS retirement lump sum tax tables — the special rates used when you take a cash lump sum from a retirement fund. There are two tables: one for lump sums taken at retirement, which is more generous, and one for lump sums taken when you withdraw early. Neither uses your normal income tax rates, so the amount of tax can surprise people who expect their usual bracket to apply.
Last updated: May 2026 · Tax year 1 March 2026 – 28 February 2027 · Source: SARS
Lump Sums Taken at Retirement
This table applies when you take a lump sum at retirement (from age 55), or on death, retrenchment, or for reasons such as ill health or incapacity. The first R550,000 is tax-free, and the rates above that are gentler than the early-withdrawal rates.
| Lump sum (R) | Tax |
|---|---|
| R1 – R550,000 | 0% (tax-free) |
| R550,001 – R770,000 | 18% above R550,000 |
| R770,001 – R1,155,000 | R39,600 + 27% above R770,000 |
| R1,155,001 and above | R143,550 + 36% above R1,155,000 |
As an example, someone retiring and taking a R700,000 lump sum (and who has not taken any lump sum before) pays no tax on the first R550,000, and 18% on the remaining R150,000 — about R27,000 in tax, leaving R673,000.
Lump Sums Taken on Early Withdrawal
This table applies when you cash out before retirement — for example, when you resign and take your savings instead of preserving them. It is far less generous: only the first R27,500 is tax-free, and the higher rates kick in much sooner.
| Lump sum (R) | Tax |
|---|---|
| R1 – R27,500 | 0% (tax-free) |
| R27,501 – R726,000 | 18% above R27,500 |
| R726,001 – R1,089,000 | R125,730 + 27% above R726,000 |
| R1,089,001 and above | R223,740 + 36% above R1,089,000 |
The gap between the two tables is the whole reason preserving your retirement savings when you change jobs almost always beats cashing out: the same R200,000 that would be tax-free at retirement could be taxed at 18% if you take it early.
Why the Tax-Free Amount Is Once in a Lifetime
An important catch: the tax-free portions are cumulative over your lifetime, not per lump sum. SARS adds together all the retirement and withdrawal lump sums you have taken since October 2007 when it works out the tax on your latest one — this is called aggregation. So if you have already used up part of your R550,000 tax-free allowance on an earlier lump sum, less of it is left for the next one. This is why cashing out a small amount early can quietly cost you more in tax on a much bigger lump sum years later at retirement, even though each withdrawal felt separate at the time.
Small Retirement Values
If your retirement savings are small, you may be able to take the whole amount as a cash lump sum rather than having to use most of it to buy a monthly pension. From 1 March 2026, the threshold for taking the full benefit as a lump sum increased to R240,000 (up from R165,000). Below that level you are not forced to “annuitise” — meaning you don’t have to convert the bulk of it into a regular income. The lump sum you take is still taxed according to the retirement table above.
How This Differs From a Two-Pot Savings Withdrawal
These lump sum tables do not apply to a withdrawal from your two-pot savings component before retirement. A savings-pot withdrawal is taxed differently — it is added to your income for the year and taxed at your marginal rate, with no tax-free portion at all. The tables on this page are for lump sums taken at retirement, or when you formally withdraw from or leave a fund. It is an easy mix-up, because both involve taking money from a retirement fund, but the tax treatment is completely different. To estimate a savings-pot withdrawal instead, use our Two-Pot Withdrawal Calculator.
Frequently Asked Questions
How much of my retirement lump sum is tax-free?
The first R550,000 is tax-free at retirement — but it is a once-in-a-lifetime amount, reduced by any lump sums you took before.
How much is tax-free if I withdraw early?
Only R27,500. Early withdrawal is taxed far more heavily than a lump sum at retirement, which is why preserving your savings usually pays off.
Are these my normal income tax rates?
No. These are special lump sum tax tables, separate from the brackets that apply to your salary.
What is aggregation?
SARS adds up all your lump sums since October 2007 to work out the tax on your latest one, so previous lump sums reduce your remaining tax-free amount.
Related pages
📋 Verified — Official sources: SARS (retirement lump sum benefits) · National Treasury Budget
⚠️ This page is for informational purposes only and does not constitute legal or financial advice. KnowMyGovt is not affiliated with SARS nor the South African government. Lump sum tax involves lifetime aggregation — confirm your position with SARS or a registered tax practitioner.
