How much tax will I pay if I invest in a fixed deposit?

a simple tax calculator


Here is the bad news. Interest earned on your savings or fixed deposit account is taxable.
Good news. You will only be taxed on interest if your interest earned in any one tax year exceeds R23.8k. This tax exemption increases to R34.5k per annum if you are 65 or older.

The amount of tax you pay on your local interest earned depends on which income tax bracket you fall into. At the end of the tax year, you receive an IT3b statement from your bank detailing how much local interest you have earned. This interest is seen as personal income for tax purposes. Amounts over R23.8k (if younger than 65) or R34.5k (if 65 or older) will be added to your income. The applicable tax bracket will then be used to calculate tax payable.

Here is a quick and easy tax calculator to help you understand how much tax you will be paying.


Monthly Income
Pension fund contributions
Monthly interest earned

My 2021/2022 Tax Statement

Income / Salary R20.0k R240.0k
- pension fund contributions R2.0k R24.0k
+ local taxable interest income * R1.02k R12.2k
Taxable income R19.02k R228.2k
Tax payable R2.19k R26.3k
Net income after tax R18.81k R225.7k

* Total interest earned for the tax year is R 36,000. However, you qualify for a R23,800 tax exemption. Thus only R12,200 is added to your taxable income.

You will be paying R26.3k in tax.

For the 2021/2022 tax year, using a monthly income of R 20.0k, pension fund contributions (RAs, pension funds, prov fund) of R 2.0k and local interest earned on your savings and investments of R 3.0k, you will be paying R26.3k in annual tax.

You are effectively paying R3.2k in annual tax on your interest earned.

If no interest was received during the tax year, you would be paying R23.2k in annual taxes. The additional R36,000 local interest makes you liable for a R26.3k tax bill. ie an additional R3.2k is due in taxes due to interest earned. A tax rate of 8.8% is thus applicable on the interest.

Meanwhile, your average tax rate is 10.4%

Your income is R225.7k. As you will be paying R26.3k in personal income tax means your average tax rate is 10.4%.

Here is your tax bracket.

You fall into the following income tax bracket based on the 2021/22 SARS tax rate tables. This also means that your marginal income tax rate is 26.0%. Which means any income (such as bonuses) will - at least - attract this tax rate.
Taxable IncomeRates of tax
R1 - R216,20018.0% of taxable income
👉 R216,201 - R337,800 R38,916 + 26.0% of taxable income above R216,200
R337,801 - R467,500 R70,532 + 31.0% of taxable income above R337,800
R467,501 - R613,600 R110,739 + 36.0% of taxable income above R467,500
R613,601 - R782,200 R163,335 + 39.0% of taxable income above R613,600
R782,201 - R1,656,600 R229,089 + 41.0% of taxable income above R782,200
R1,656,601 and above R587,593 + 45.0% of taxable income above R1,656,600
Note. Whilst you fall into the 26.0% tax bracket, your tax bill is reduced by tax rebates of R15,714.0. Thus you end up with tax payable of R26,322.0.