How much interest is tax-free in South Africa?

R23,800 per year for taxpayers under 65, and R34,500 for those 65 and older. The exemption is per person, not per account.

Does TFSA interest count toward the exemption?

No — TFSA returns are always tax-free, separate from the section 10(1)(i) interest exemption. You can use both: the first R23,800 of non-TFSA interest is exempt, and TFSA interest stays tax-free regardless.

Does the exemption cover dividends or REIT distributions?

No. Local dividends are subject to 20% Dividends Tax. REIT distributions are taxed as ordinary income and do not benefit from this exemption.

Does foreign interest qualify?

Foreign interest is fully taxable from the first rand — there is no equivalent exemption for offshore interest.

The SA interest exemption · invoicebook.co.za

The two numbers

R23,800 per tax year if you're under 65 on the last day of the year.
R34,500 per tax year if you're 65 or older.

These are exemption amounts — the interest you don't pay tax on. Any interest above the exemption is added to your taxable income and taxed at your marginal rate.

What kind of interest qualifies

Section 10(1)(i) of the Income Tax Act gives the exemption to interest from a South African source. In practice:

Bank savings and fixed deposits at SA banks — yes.
Money-market funds holding SA instruments — yes.
Retail bonds, government bonds — yes.
Peer-to-peer loans and private credit, if the debtor is in SA — yes.
Foreign interest (money in a US savings account, for example) — no. Foreign interest is taxed from the first rand (though it may be sheltered by a section 10B(2)(a) deduction if it's a foreign dividend instead — different rules).

Worked example

You're 40, earning a R600,000 salary, and hold R350,000 in a SA money-market fund returning 9%. Interest received: R31,500.

Exemption: R23,800.
Taxable portion: R31,500 − R23,800 = R7,700.
Added to your R600,000 salary → taxed at your 36% marginal bracket → R2,772 extra tax.

Below about R265,000 in a 9% money-market fund, interest stays fully within the exemption and you pay nothing. At age 65, the threshold rises to about R383,000.

How it stacks with a TFSA

A tax-free savings account sits outside the interest exemption — TFSA returns are always tax-free, regardless of the R23,800 / R34,500 limit. You can use both: first R23,800 of non-TFSA interest is exempt, then your TFSA grows tax-free on top. For most small-to-mid savers, the exemption alone covers their non-TFSA interest, and the TFSA is better used for equity exposure where the long-term tax saving is bigger.

How to claim it

You don't. The exemption is applied automatically by SARS when you file your ITR12 — it knows your age from your ID number, reads your interest from the IT3(b) certificates your banks issue, and deducts the exemption before applying rates. You just need to make sure your bank has your correct tax number and all IT3(b) certificates land in your eFiling profile at year-end.

What about companies and trusts?

The exemption is for natural persons only. Companies and trusts pay tax on every rand of interest they earn (at 27% for companies, or the trust's rate). One reason people build interest-earning portfolios in their personal name rather than in a company structure.