The 13th cheque is a welcome year-end bonus for many South African employees, but understanding how it's taxed can be confusing. This guide explains exactly how your 13th cheque works, how much tax you'll pay, and what you'll actually receive in your bank account.
What is a 13th Cheque?
A 13th cheque is an additional payment, typically equal to one month's salary, paid to employees once a year. Think of it as receiving 13 months of salary instead of the standard 12 months.
Key Facts About 13th Cheques:
- Not legally required - depends on your employment contract
- Usually paid in November or December before the holidays
- Typically equal to your gross monthly salary
- Taxed as part of your total annual income, not separately
- Subject to the same deductions as regular salary (UIF, pension, medical aid)
- Pro-rated if you joined during the year or work part-time
13th Cheque vs. Performance Bonus
It's important to understand the difference between these two types of payments:
13th Cheque
- ✅ Guaranteed - contractual right
- ✅ Fixed Amount - usually 1 month's salary
- ✅ Predictable - paid at same time annually
- ✅ Pro-rated - based on months worked
- ✅ Not Performance Based - automatic
Performance Bonus
- 📊 Discretionary - based on performance
- 📊 Variable Amount - depends on targets
- 📊 Unpredictable - not guaranteed
- 📊 Merit Based - linked to KPIs
- 📊 Can Vary Widely - 0% to 50%+ of salary
How is the 13th Cheque Taxed?
This is where many people get confused. Your 13th cheque is not taxed separately - it's added to your total annual income and taxed at your marginal tax rate.
How PAYE Works on Your 13th Cheque:
- Your employer calculates your total annual income (12 months + 13th cheque)
- They determine your cumulative tax liability for the year
- They subtract the tax you've already paid in months 1-11
- The remaining tax is deducted from your 13th cheque
⚠️ Common Misconception:
Many people think their 13th cheque is "taxed at 45%" or "taxed more heavily." This is incorrect. It's simply taxed at your normal marginal rate based on your total annual income. It may seem higher because more tax is deducted in that one month to balance your annual tax liability.
Real-World Examples
Let's see exactly how much you'll take home from your 13th cheque at different salary levels:
Example 1: Monthly Salary R20,000
Example 2: Monthly Salary R30,000
Example 3: Monthly Salary R50,000
What Affects Your 13th Cheque Amount?
Several factors can impact how much you receive:
📅 Months Worked
If you started mid-year, your 13th cheque is usually pro-rated based on months worked.
Example: 8 months worked = 8/12 × salary
⏰ Part-Time Work
Part-time employees typically receive a pro-rated 13th cheque based on hours worked.
Example: 50% hours = 50% of 13th cheque
💼 Resignation Notice
If you resign, you may forfeit your 13th cheque depending on company policy and timing.
Check your contract for specific terms
📈 Salary Changes
If you received a raise during the year, the 13th cheque is usually based on your December salary.
Paid at current rate, not annual average
Tax Bracket Impact on Your 13th Cheque
The tax you pay on your 13th cheque depends on your marginal tax rate. Here's a quick reference:
| Monthly Salary | Annual Income (13 months) | Marginal Rate | Approx. Tax on Bonus |
|---|---|---|---|
| R15,000 | R195,000 | 18% | ~R2,700 |
| R25,000 | R325,000 | 26% | ~R6,500 |
| R35,000 | R455,000 | 31% | ~R10,850 |
| R50,000 | R650,000 | 36% | ~R18,000 |
| R75,000 | R975,000 | 41% | ~R30,750 |
Smart Ways to Use Your 13th Cheque
Rather than spending your entire 13th cheque, consider these financial priorities:
Emergency Fund
Build 3-6 months of expenses in savings for unexpected costs
Pay Down Debt
Focus on high-interest debt like credit cards and personal loans
Retirement Top-Up
Extra RA contribution reduces next year's tax and builds wealth
Education Savings
Invest in unit trusts or education policies for children
Property Deposit
Save towards a house deposit or extra bond payment
Responsible Spending
After priorities, enjoy some guilt-free spending
💡 Pro Tip: The 50/30/20 Rule
A smart approach to your 13th cheque:
- 50% - Savings and debt repayment
- 30% - Necessary expenses (January school fees, insurance)
- 20% - Discretionary spending (gifts, holidays, treats)
Calculate Your 13th Cheque Take-Home
Use our free calculator to see exactly how much you'll receive after tax and other deductions.
Calculate My 13th Cheque →Key Takeaways
- The 13th cheque is not mandatory - it depends on your employment contract
- It's taxed as part of your annual income at your marginal tax rate, not separately
- Higher earners pay more tax on their 13th cheque (up to 45% marginal rate)
- The tax may seem high because it balances your annual tax liability
- UIF, pension, and medical aid deductions also apply to your 13th cheque
- Pro-rating applies if you worked less than 12 months
- Use your 13th cheque wisely - prioritize savings and debt before spending
- Check your payslip to understand all deductions clearly
Disclaimer: This guide provides general information about 13th cheque taxation in South Africa based on 2025/2026 tax rates. Actual tax deductions may vary based on your specific circumstances, total annual income, and other deductions. This should not be considered personalized tax or financial advice. Tax calculations shown are estimates for illustrative purposes. Always verify your payslip and consult with a tax professional for advice specific to your situation.