· Updated · Built around the Tax-free savings calculator
Photo: Joslyn Pickens on Pexels (free licence)
A tax-free savings account (TFSA) is the simplest tax break South Africans get: no tax on the interest, the dividends or the growth, ever. The catch is that you can only put in so much - and the real prize is not the tax you save in year one, it is the decades of growth after the last rand goes in.
The rules in four lines
- R46 000 a year from 1 March 2026 (it was R36 000) - about R3 833 a month.
- R500 000 in your lifetime, across every TFSA you have. Growth does not count towards it - only what you put in.
- Go over either limit and SARS taxes the excess at 40% - the tax-free savings calculator shows the penalty. Unused room does not carry over to next year.
- Money you take out cannot be put back without using up limit again - so a TFSA is a poor emergency fund. Build that separately with the savings goal calculator.
Start now, or ten years from now
The chart puts the same monthly saving into a TFSA starting today and starting ten years later. Contributions stop once the R500 000 lifetime limit is used; after that the pot just grows. The third line is what you actually put in.
What the chart shows
- Most of the final pot is growth, not your money. At the full limit and 10% a year, you put in R500 000 over just under 11 years - and if you then leave it, growth does the rest.
- Waiting ten years costs far more than ten years of saving. Both savers put in the same R500 000; the late starter simply has a decade less for it to compound.
- The growth rate is your choice of investment, not a promise. A TFSA can hold a bank deposit (compare rates with the fixed deposit calculator), a money market fund or an equity index fund - and its dividends escape the 20% dividends tax. The default 10% is an assumption for a growth fund after fees, not a sourced statistic.
- Today's rands: the KPI row also shows the final pot divided by inflation at Stats SA's latest CPI ({{cpi}}), so you can see what it would buy now - the inflation calculator does the same for any amount.
Check your own account
Already have a TFSA? Put in what you have contributed so far and what it is worth today - the calculator shows when you reach the lifetime limit and whether you are over the yearly one:
Weighing a TFSA against a retirement annuity? The RA or TFSA calculator adds the tax SARS gives back on an RA. To see growth on any lump sum or monthly amount, use the compound interest calculator.
Sources
- TFSA annual limit R46 000 from 1 March 2026 (was R36 000), R500 000 lifetime limit, 40% tax on excess contributions: SARS - Tax Free Investments, announced in the February 2026 Budget.
- No income tax, dividends tax or capital gains tax on TFSA returns: same SARS page; section 12T of the Income Tax Act.
- CPI {{cpi}}: Stats SA consumer price index release, as used across CalcSA.
- Not verified from a primary source: the growth rate - it is a slider assumption, and past returns do not predict future ones.
Calculators used in this post
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