The annual carbon tax accounts and payments for the 2025/2026 tax period, which started on 1 January 2025 and ended on 31 December 2025, are now due. The Excise declaration (EXD 180) account, with its relevant annexures and carbon tax payments, can be submitted on e-filing from 01 July. The closing date for submissions is 31 July.
Submission forms related to the carbon tax
DA 180 Environmental Levy Account for Carbon Tax
DA 180.01A.1 Fuel Combustion (Stationary)
DA 180.01A.2 Fuel Combustion (Non-Stationary)
DA 180.01B.1 Fugitive (Oil and Natural Gas)
DA 180.01B.2 Fugitive (Coal Mining and Handling)
DA 180.01C Industrial Process
DA 180.02 Carbon Tax Allowances
EXD 180 Electronic account via SARS eFiling
DA 185 Licence Applications
The president signed into law the Climate Change Act on 23 July 2024, which seeks to coordinate South Africa’s response to climate change and sets out additional mitigation and adaptation policies and measures to support South Africa’s transition to a lower-carbon and climate-resilient economy. The carbon tax was introduced in June 2019 at a relatively modest headline rate of R120 per tonne of carbon dioxide equivalent (t/CO₂e). The Carbon Tax Act gives effect to the polluter-pays principle and ensures firms and consumers take the negative adverse costs (externalities) into account in their future production, consumption and investment decisions.
The first phase of the carbon tax ended on 31 December 2025; the second phase commenced on 1 January 2026.
Adjustments to levies became effective on 1 April 2026. Key allowances, including the basic tax-free allowance and trade-exposure threshold, are retained until 2030, while the carbon offset allowance has increased by 5%. These measures form part of South Africa’s long‑term carbon‑pricing trajectory under the environmental tax framework. To help achieve South Africa’s NDC commitments for 2025 and 2030, revisions to the carbon tax rates for the 2nd phase from 1 January 2026 to 31 December 2030 were necessary. This aimed to strengthen the carbon price signals and provide policy certainty on the future carbon tax design and price path.
CARBON TAX RATE INCREASE
The Act specified that the initial rate of a carbon tax of R120 per tonne would increase by consumer price inflation (“CPI”) + 2% per year until 31 December 2022, whereafter the rate of tax will be increased only by CPI. The carbon tax rate increased from R144 per tonne of carbon dioxide equivalent (CO₂e) to R159 per tonne of CO₂e for the 2023 calendar year.
The following carbon tax rates per tonne are applicable for the period 2024 – 2030.
2024 R190
2025 R236
2026 R308
2027 R347
2028 R385
2029 R424
2030 R462
The National Treasury’s 2026 budget introduced measures that will affect carbon tax exposure, energy strategy, emissions compliance and wider climate planning for South African businesses.
Treasury confirmed an increase in the carbon fuel levy effective 1 April 2026:
Petrol increased by 5c/litre to 19c/litre.
Diesel increased by 6c/litre to 23c/litre.
CARBON TAX RATE AND PRICE PATH
The headline carbon tax rate increased from R236 to R308 per tonne of CO₂e from 1 January 2026 (a 31% increase, the biggest increase since the start of the tax in 2019). Phase 2 of the carbon tax regime runs from 1 January 2026 to 31 December 2030.
The government proposes to separate the carbon fuel levy from the general fuel levy once SARS system upgrades are complete. This would be enabled through a new Part 5C in Schedule No. 1 of the Customs and Excise Act, with the aim of improving transparency and simplifying administration.
Reduced burden for backup generators
Treasury acknowledges that many organisations run diesel generators only during load-shedding and therefore emit relatively little. To reduce disproportionate compliance effort, it proposes replacing the current 10 MW capacity threshold for IPCC category 1A4a activities with a 25 000 tCO₂e annual emissions threshold, effective 1 January 2026.
CARBON BUDGET REFUNDS
Treasury is moving to clarify the carbon budget refund mechanism proposed in the 2025 Taxation Laws Amendment Bill. The intent is to remove uncertainty and align refunds with the five-year carbon budget cycle: refunds would be claimable in year 3 (covering the first two tax periods) and again in year 6 (covering years 3–5).
To support this, the Customs and Excise Act would be amended to allow claims beyond the current two-year prescription period. The effective date will be set by the Minister of Finance.
MODERNISING CARBON OFFSETS AND MARKET DATA
The National Treasury is continuing work to strengthen and modernise South Africa’s carbon offsets regime, building on its 2025 consultation. Reforms are expected to improve market integrity, clarify rules and help unlock low-carbon investment.
Treasury also plans to pilot the Common Carbon Credit Data Model (CCCDM) in 2026 to improve data consistency and interoperability across carbon markets, with potential future integration into the domestic framework if the pilot is successful.
In Phase 2 of the carbon tax (i.e., from 1 January 2026), the carbon offset allowance has been increased by 5 percentage points from:
10% to 15% for fuel combustion emissions
5% to 10% for process and fugitive emissions
This increases flexibility to use offsets to reduce carbon tax payable for the 2026 year of assessment (submission due by July 2027), which may partially cushion the higher carbon tax rate.
In the first phase of the carbon tax, the Carbon Tax Act made provision for a special tax deduction for electricity generators in the form of a renewable energy premium and a levy on electricity generation. This is known as neutrality on the electricity price. This was designed to cushion the impact of high electricity prices on energy-intensive users and the entire country at large. It also allowed time to increase the share of renewable energy in electricity generation.
The neutrality on the electricity price EXPIRED at the end of 2025, which is when electricity generated by Eskom will be subject to a carbon tax. Without a doubt, this carbon tax liability will be passed on to its consumers by our beloved Eskom.