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 2025–26 income tax brackets: 10.5% to $14,000; 17.5% to $48,000; 30% to $70,000; 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 23.9%. Add ACC levy of 1.67% for total deductions.
NZ Income Tax Brackets 2025–26
| Bracket | Rate | Tax on This Bracket | Cumulative Tax |
|---|---|---|---|
| $0 – $14,000 | 10.5% | $1,470 | $1,470 |
| $14,001 – $48,000 | 17.5% | $5,950 | $7,420 |
| $48,001 – $70,000 | 30.0% | $6,600 | $14,020 |
| $70,001 – $180,000 | 33.0% | $36,300 | $50,320 |
| $180,001+ | 39.0% | On income above $180k | — |
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 $14,000 | 10.5% | $1,470 |
| $14,001 – $48,000 = $34,000 | 17.5% | $5,950 |
| $48,001 – $70,000 = $22,000 | 30.0% | $6,600 |
| $70,001 – $80,000 = $10,000 | 33.0% | $3,300 |
| Total PAYE tax | $17,320 |
Effective (average) rate: $17,320 ÷ $80,000 = 21.65% — not 33%.
Effective Tax Rates at Every Income Level
| Gross Income | PAYE Tax | Effective Rate | Marginal Rate |
|---|---|---|---|
| $14,000 | $1,470 | 10.5% | 10.5% |
| $25,000 | $3,395 | 13.6% | 17.5% |
| $35,000 | $5,145 | 14.7% | 17.5% |
| $48,000 | $7,420 | 15.5% | 17.5% |
| $50,000 | $8,020 | 16.0% | 30.0% |
| $60,000 | $10,520 | 17.5% | 30.0% |
| $70,000 | $14,020 | 20.0% | 30.0% |
| $80,000 | $17,320 | 21.7% | 33.0% |
| $90,000 | $20,620 | 22.9% | 33.0% |
| $100,000 | $23,920 | 23.9% | 33.0% |
| $120,000 | $30,520 | 25.4% | 33.0% |
| $150,000 | $40,420 | 26.9% | 33.0% |
| $180,000 | $50,320 | 27.9% | 33.0% |
| $200,000 | $58,120 | 29.1% | 39.0% |
| $250,000 | $77,620 | 31.0% | 39.0% |
| $300,000 | $97,120 | 32.4% | 39.0% |
PAYE only. Does not include ACC earner levy (1.67%, capped at $139,892 income).
ACC Earner Levy: The Hidden 10th Bracket
In addition to PAYE, most NZ employees pay the ACC earner levy:
- Rate: 1.67% of gross earnings
- Maximum: Capped on income up to $139,892
- Maximum annual levy: $2,336
Including ACC, the combined effective rate on a $100,000 salary is approximately 25.6% (PAYE 23.9% + ACC 1.67%).
The ACC levy does not apply above $139,892 income — which means the marginal total deduction rate above this threshold falls by 1.67 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 |
| 2021 | 39% top rate reintroduced on income above $180,000 |
| 2024 | Thresholds adjusted: $14,000 / $48,000 / $70,000 / $180,000 |
| 2025–26 | Current brackets unchanged from 2024 adjustments |
The 2024 threshold adjustments were the first significant change in over a decade. The $48,000 threshold (previously $48,000 — unchanged) and the $70,000 threshold (previously $70,000) were the subject of political debate; the current thresholds took effect from 31 July 2024.
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 – $14,000 | 10.5% |
| $14,001 – $48,000 | 17.5% |
| $48,001+ | 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 $70,001 and $180,000).
Did NZ tax brackets change in 2024?
Yes. From 31 July 2024, the government adjusted several thresholds: the second bracket now tops out at $48,000 (previously $48,000), the third at $70,000 (previously $70,000), and the fourth at $180,000 (previously $180,000). 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) — often called the “no-notch” credit — is worth up to $520/year for individuals earning $24,000–$48,000 who do not receive Working for Families or benefits. Use tax code ME to receive it through PAYE during the year.