ETI: Are you claiming what you're owed?

The Employment Tax Incentive is one of the few genuinely good deals SARS offers employers, and a surprising number of businesses that qualify simply do not claim it. If you employ young people, this is money that reduces the PAYE you hand over each month. Here is how it works and how to tell whether you are leaving it on the table.

What ETI is

ETI is a youth employment subsidy. When you hire qualifying employees aged 18 to 29, you can reduce the total PAYE you pay to SARS by a set amount per qualifying employee, for up to 24 months. It does not cost the employee anything and it does not come off their salary. It simply lowers your monthly PAYE bill.

The amounts, updated from 1 April 2025

The incentive was increased from 1 April 2025. The minimum monthly remuneration band moved to R2,500 (previously R2,000), and the upper qualifying limit rose to R7,500 (previously R6,500). The current structure works like this:

First 12 months of employment

• Earning R0 to R2,499.99: 60% of the employee's monthly remuneration.
• Earning R2,500 to R5,499.99: a flat R1,500 per month.
• Earning R5,500 to R7,499.99: R1,500 reduced by 75% of the amount above R5,500.

Second 12 months of employment

• Earning R0 to R2,499.99: 30% of monthly remuneration.
• Earning R2,500 to R5,499.99: a flat R750 per month.
• Earning R5,500 to R7,499.99: R750 reduced by 37.5% of the amount above R5,500.

At the top end, an employer claiming for a qualifying employee can reduce PAYE by up to R1,500 a month in the first year. Across several young hires, that adds up quickly.

Who qualifies

• The employee is 18 to 29 years old (the age cap falls away in special economic zones).
• They have a valid South African ID, asylum seeker permit or refugee ID.
• They were employed on or after 1 October 2013.
• They earn below R7,500 a month and are paid at least the minimum wage, or R2,500 where no wage regulation applies.
• They are not a domestic worker or a connected person to the employer.

The catch worth knowing

ETI has to be calculated correctly per employee, per month, and reconciled twice a year on the EMP501. Over-claiming, or claiming for employees who do not actually qualify, gets reversed with penalties. That is why some employers avoid it altogether, which means missing out on a legitimate saving out of caution. Done properly, it is straightforward and genuinely worth having.

If you employ young staff and you are not claiming ETI, or you are not sure your claim is right, it is worth a look. We build the calculation into payroll and reconcile it as part of your EMP501, so you get the saving without the audit risk.

This article is general information, not tax or legal advice, and reflects the rules and figures current as at July 2026. SARS, Compensation Fund and Department of Employment and Labour requirements change. Confirm current deadlines and amounts before acting, or get in touch and we'll check your specific situation.