New Zealand uses a progressive income tax system — higher incomes are taxed at higher rates, but only on the portion above each threshold. Understanding how the brackets work helps you understand your true tax rate and how to plan around them.
NZ's current income tax brackets (in effect since 1 April 2025, covering both the 2025–26 and 2026–27 tax years): 10.5% to $15,600; 17.5% to $53,500; 30% to $78,100; 33% to $180,000; 39% above $180,000. These are marginal rates — a $100,000 earner does not pay 33% on all income. Their effective (average) tax rate is approximately 22.9%. Add the ACC earner levy (1.75% for 2026–27; it was 1.67% for 2025–26) for total deductions.
NZ Income Tax Brackets (2025–26 and 2026–27)
| Bracket | Rate | Tax on This Bracket | Cumulative Tax |
|---|---|---|---|
| $0 – $15,600 | 10.5% | $1,638 | $1,638 |
| $15,601 – $53,500 | 17.5% | $6,632.50 | $8,270.50 |
| $53,501 – $78,100 | 30.0% | $7,380 | $15,650.50 |
| $78,101 – $180,000 | 33.0% | $33,627 | $49,277.50 |
| $180,001+ | 39.0% | On income above $180k | — |
These thresholds took effect from 1 April 2025 and apply unchanged through the 2026–27 tax year. Before 31 July 2024, the thresholds were $14,000 / $48,000 / $70,000 / $180,000; the 2024–25 tax year used IRD’s blended transitional rates because the change happened mid-year. See “History of NZ Tax Brackets” below.
The 39% top rate on income above $180,000 was introduced from 1 April 2021.
How Marginal Tax Rates Work
A common misconception is that moving into a higher bracket means all your income is taxed at the new rate. This is incorrect. The higher rate applies only to income above the threshold.
Example: $80,000 salary
| Portion of income | Rate | Tax |
|---|---|---|
| First $15,600 | 10.5% | $1,638 |
| $15,601 – $53,500 = $37,900 | 17.5% | $6,632.50 |
| $53,501 – $78,100 = $24,600 | 30.0% | $7,380 |
| $78,101 – $80,000 = $1,900 | 33.0% | $627 |
| Total PAYE tax | $16,277.50 |
Effective (average) rate: $16,277.50 ÷ $80,000 = 20.35% — not 33%.
Effective Tax Rates at Every Income Level
| Gross Income | PAYE Tax | Effective Rate | Marginal Rate |
|---|---|---|---|
| $15,600 | $1,638 | 10.5% | 10.5% |
| $25,000 | $3,283 | 13.1% | 17.5% |
| $35,000 | $5,033 | 14.4% | 17.5% |
| $50,000 | $7,658 | 15.3% | 17.5% |
| $53,500 | $8,270.50 | 15.5% | 17.5% |
| $60,000 | $10,220.50 | 17.0% | 30.0% |
| $78,100 | $15,650.50 | 20.0% | 30.0% |
| $80,000 | $16,277.50 | 20.3% | 33.0% |
| $90,000 | $19,577.50 | 21.8% | 33.0% |
| $100,000 | $22,877.50 | 22.9% | 33.0% |
| $120,000 | $29,477.50 | 24.6% | 33.0% |
| $150,000 | $39,377.50 | 26.3% | 33.0% |
| $180,000 | $49,277.50 | 27.4% | 33.0% |
| $200,000 | $57,077.50 | 28.5% | 39.0% |
| $250,000 | $76,577.50 | 30.6% | 39.0% |
| $300,000 | $96,077.50 | 32.0% | 39.0% |
PAYE only. Does not include the ACC earner levy (1.75% for 2026–27, capped at $156,641 income; it was 1.67% capped at $152,790 for 2025–26).
ACC Earner Levy: The Hidden 10th Bracket
In addition to PAYE, most NZ employees pay the ACC earner levy:
- Rate: 1.75% of gross earnings (2026–27 rate; it was 1.67% for 2025–26)
- Maximum: Capped on income up to $156,641 (2026–27; $152,790 for 2025–26)
- Maximum annual levy: $2,741.22 (2026–27; $2,551.59 for 2025–26)
Including ACC, the combined effective rate on a $100,000 salary is approximately 24.6% (PAYE 22.9% + ACC 1.75%).
The ACC levy does not apply above $156,641 income — which means the marginal total deduction rate above this threshold falls by 1.75 percentage points (a curious feature of the NZ system).
History of NZ Tax Brackets
| Year | Brackets / Notable Changes |
|---|---|
| 2010 | Top rate reduced from 39% to 33%; bottom rate reduced from 15% to 10.5% |
| 2011 | Introduction of 10.5% / 17.5% / 30% / 33% structure, at thresholds of $14,000 / $48,000 / $70,000 |
| 2021 | 39% top rate reintroduced on income above $180,000 |
| 31 July 2024 | Thresholds increased to $15,600 / $53,500 / $78,100 / $180,000. Because the change took effect mid-tax-year, IRD used blended transitional rates for full-year filers in the 2024–25 tax year |
| 2025–26 and 2026–27 | Current brackets: $15,600 / $53,500 / $78,100 / $180,000 — unchanged since the 31 July 2024 increase |
The 31 July 2024 threshold increase was the first significant change to the bracket thresholds in over a decade. The second bracket threshold rose from $48,000 to $53,500 and the third from $70,000 to $78,100 — a subject of political debate at the time. The clean $15,600 / $53,500 / $78,100 thresholds have applied for full tax years since 1 April 2025 and remain current for 2026–27.
Do NZ Tax Brackets Include GST?
No. Income tax (PAYE) and GST are entirely separate systems:
- PAYE/income tax: Applies to your employment or business income
- GST: Applies to the goods and services you buy and sell
If you are self-employed and GST-registered, you file both income tax (IR3) and GST returns separately. Your GST turnover does not directly affect your income tax brackets.
PIE Tax (KiwiSaver and Managed Funds)
Investment income earned inside KiwiSaver or a Portfolio Investment Entity (PIE) fund is taxed separately from PAYE — at your Prescribed Investor Rate (PIR) rather than your marginal income tax rate.
PIR rates:
| Taxable Income | PIR |
|---|---|
| $0 – $15,600 | 10.5% |
| $15,601 – $53,500 | 17.5% |
| $53,501+ | 28.0% |
Note: the top PIE rate is 28%, not 33% or 39% — this is a significant tax advantage for higher earners who invest through PIE funds. A person in the 33% PAYE bracket pays only 28% on their PIE investment income.
Frequently Asked Questions
What is the top tax rate in New Zealand?
39%, applied to income above $180,000 per year. Introduced from 1 April 2021. Below this threshold, the top marginal rate is 33% (on income between $78,101 and $180,000).
Did NZ tax brackets change in 2024?
Yes. From 31 July 2024, the government adjusted thresholds: the second bracket now tops out at $53,500 (previously $48,000), the third at $78,100 (previously $70,000), and the fourth remains at $180,000. Because the change took effect mid-tax-year, IRD applied blended transitional rates for the 2024–25 tax year; the clean $15,600 / $53,500 / $78,100 / $180,000 thresholds have applied for full tax years since 1 April 2025, covering both 2025–26 and 2026–27. These adjustments provided modest tax cuts, particularly for incomes around $50,000–$100,000.
How does NZ income tax compare to Australia?
Australia’s top marginal rate is 45% (on income above AUD $190,000) vs NZ’s 39% (above NZD $180,000). Australia has a tax-free threshold of AUD $18,200 (roughly NZD $20,000); NZ has no true tax-free threshold but has a lower first-bracket rate of 10.5%. For most ordinary working incomes, effective rates in both countries are broadly similar.
Do I pay tax on KiwiSaver in NZ?
Not directly through PAYE. KiwiSaver investment returns are taxed through the PIE system at your Prescribed Investor Rate (10.5%, 17.5%, or 28%). This tax is managed by your KiwiSaver provider and is prepaid — you do not file separately for it. See the KiwiSaver PIE tax guide.
What is the no-notch tax credit in NZ?
The independent earner tax credit (IETC) pays up to $520 a year to New Zealand tax residents earning $24,000 to $70,000 (reducing by 13 cents a dollar above $66,000), as long as neither you nor your partner receives Working for Families and you don't receive an income-tested benefit, NZ Super or a Veteran's Pension (or an overseas equivalent). Use tax code ME to receive it through PAYE during the year.