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What are boxes 1, 2, and 3 in income tax?

At the end of the financial year, you must file your income tax return and pay tax. There are different types of income, divided into 3 categories (boxes), each with its own tax rate.

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Written by Danica van Zyl

Box 1: taxable income from work and home

Box 1 includes most of your income (and sometimes all of it). It includes income from work and home, meaning your income minus deductions.

Other types of income in Box 1 include:

  • tips and other income

  • foreign income

  • income as a freelancer, childminder, artist, or professional athlete

  • periodic payments (such as annuities or alimony)

  • negative personal deductions

  • refunded annuity premiums

  • imputed rental value of owner-occupied housing

  • capital insurance for owner-occupied housing

Deductions in Box 1 may include:

  • public transport travel deduction

  • deductible home ownership costs

  • retirement provision contributions (e.g. annuities)

  • personal deductions such as:

    • alimony and maintenance obligations

    • specific healthcare costs

    • special care for severely disabled persons at home

    • education expenses

    • donations

    • remaining personal deductions

Box 2: taxable income from substantial interest

Box 2 applies if you (or your tax partner) own more than 5% of the shares in a company (BV) or cooperative.

Box 3: taxable income from savings and investments

Box 3 includes savings and investments, such as a second home.

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