Income in New Zealand is taxed through a set of progressive brackets, deducted from your pay as PAYE by your employer. There is no separate social security tax, but there is an ACC earners' levy that funds accident cover, and KiwiSaver contributions come out of the same pay. This guide gives an overview; exact brackets and levy rates are set by Inland Revenue and change from time to time.
New Zealand has five income tax brackets: 10.5% on income up to $15,600, 17.5% up to $53,500, 30% up to $78,100, 33% up to $180,000, and 39% above $180,000. The rate applies only to the income in each band, so moving into a higher bracket never leaves you worse off overall.
For an employee, your employer works out PAYE using your tax code and pays it to Inland Revenue. There are no personal tax-free allowances or the equivalent of tax credits for most people; the low first bracket does the job of a tax-free threshold. If you have one job and simple affairs, Inland Revenue squares things up automatically after the tax year and refunds or bills any difference.
On top of income tax, employees pay the ACC earners' levy — a percentage of your earnings up to a cap — which funds ACC's cover for injuries that happen away from work. It is deducted from your pay alongside PAYE. Self-employed people pay ACC levies separately.
Interest you earn on a savings account or term deposit is taxable. The bank deducts Resident Withholding Tax (RWT) at the rate you nominate, which should match your income tax rate. Dividends have RWT deducted too. Income from a New Zealand managed fund (a PIE) is taxed at your Prescribed Investor Rate (PIR), capped at 28%, which for higher earners is lower than their marginal rate.
KiwiSaver employee contributions (a percentage of your gross pay that you choose) come out of your pay after tax. Your employer's contribution is on top, but employer super contribution tax (ESCT) is deducted from it. The government's annual contribution of up to $260.72 is paid separately if you contribute enough during the KiwiSaver year.
If you have children, Working for Families tax credits can top up your income, abating as your family income rises. Your 'marginal rate' — the tax on your next dollar — is income tax plus the ACC levy. This matters when you weigh extra work, or salary sacrifice into KiwiSaver where allowed.
Informational content, not financial, tax or legal advice. Check amounts, limits and current rules directly with the official sources (Work and Income, the Reserve Bank of New Zealand, Inland Revenue, the Depositor Compensation Scheme) before making a decision.
NZ Superannuation: age, residence rules and how much you get
NZ Super is paid from age 65 to eligible residents — it is not based on contributions. How the residence test works, the rates, and how it fits with KiwiSaver.
Read the article →Emergency fund: how much do you need?
An emergency fund of 3-6 months of expenses protects you from unexpected costs without expensive debt. How to work out your figure and how to build it.
Read the article →Financial independence: how to calculate your number
Financial independence means your investment returns cover your spending. How to use the 4% rule, how much your savings rate matters, and how to account for tax and NZ Super.
Read the article →