New Zealand Tax Brackets 2026-27
For 2026-27, New Zealand income tax starts from the first dollar at 10.5% — there is no tax-free threshold. Rates rise through five bands to 39% above $180,000, with the IETC credit of $520/year for earners under $70,000.
Verified against IRD — Tax rates for individuals (ird.govt.nz). Reviewed by Chantal Rapley, CA ANZ.
New Zealand · 2026-27 · Summary
In New Zealand for the 2026-27 tax year, income tax uses five progressive brackets. There is no tax-free threshold — every dollar is taxed from the first one. The rate is 10.5% on income up to $15,600; 17.5% on $15,601–$53,500; 30% on $53,501–$78,100; 33% on $78,101–$180,000; and 39% above $180,000. The Independent Earner Tax Credit (IETC) provides a $520/year credit for incomes $24,000–$70,000.
2026-27 New Zealand income tax brackets
| Taxable income | Rate | Cumulative tax |
|---|---|---|
| Up to $15,600 | 11% | $1,638 |
| $15,600 – $53,500 | 18% | $8,271 |
| $53,500 – $78,100 | 30% | $15,651 |
| $78,100 – $180,000 | 33% | $49,278 |
| Over $180,000 | 39% | — |
Income tax brackets only. No tax-free threshold — all income taxed from $0. ACC Earner Levy (1.75%, capped at $156,641 liable earnings) and IETC credit are shown separately in the breakdown. Source: IRD ird.govt.nz.
Are New Zealand tax brackets changing in 2026-27?
No changes to income tax brackets or rates for 2026-27. The ACC Earner Levy rate of 1.75% is unchanged; the maximum liable earnings ceiling increased to $156,641 (from $142,283 in 2025-26). The KiwiSaver default contribution rate rose from 3% to 3.5% on 1 April 2026 (will rise to 4% on 1 April 2028). Student loan repayment threshold increased to $24,128 for 2026-27.
| Threshold / parameter | Previous year | 2026-27 | Change |
|---|---|---|---|
| Income tax brackets | All unchanged | All unchanged | No change (frozen) |
| 39% top rate threshold | $180,000 | $180,000 | No change |
| ACC earner levy rate | 1.75% | 1.75% | No change |
| ACC max liable earnings | $142,283 | $156,641 | +$14,358 |
| KiwiSaver default rate | 3% | 3.5% | +0.5 pp (from Apr 2026) |
| Student loan repayment threshold | $23,928 | $24,128 | +$200 |
New Zealand tax at common income levels (2026-27)
Computed by the Tax Atlas engine from official 2026-27 rates. Default filing status; no additional deductions or credits.
| Gross income | Taxable income | Total tax | Take-home | Eff. rate |
|---|---|---|---|---|
| $25,000 | $25,000 | $3,201 | $21,800 | 12.8% |
| $55,000 | $55,000 | $9,163 | $45,837 | 16.7% |
| $80,000 | $80,000 | $17,678 | $62,323 | 22.1% |
| $120,000 | $120,000 | $31,578 | $88,423 | 26.3% |
| $200,000 | $200,000 | $59,819 | $140,181 | 29.9% |
Step-by-step: $80,000 gross
Use the income tax calculator for a personalised calculation with your exact income, filing status, and deductions.
How New Zealand tax brackets work
New Zealand's income tax system is progressive but uniquely has no tax-free threshold. Unlike Australia, where the first $18,200 is tax-free, every dollar of NZ income is taxed from the first one at 10.5%. This means all NZ taxpayers pay some tax even at low incomes. At $20,000 annual income, the income tax is $2,060.
The Independent Earner Tax Credit (IETC) adds a $520/year credit for workers earning $24,000–$66,000 (full credit), phasing out at $0.13 per dollar between $66,000 and $70,000. This phase-out creates an effective 43% marginal rate zone between $66,000 and $70,000 — the 30% bracket rate plus 13 cents of IETC lost per dollar earned. Workers in this zone face a higher effective marginal rate than those just above it.
The highest rate of 39% applies above $180,000 and was introduced from 1 April 2021. New Zealand has five brackets with a relatively narrow high-income zone ($78,101–$180,000) taxed at 33%. By contrast, the UK has three brackets and Australia has five with higher thresholds.
Employees also pay the ACC Earner Levy (1.75% of liable earnings up to $156,641) through PAYE — this is collected alongside income tax but is separate from it. KiwiSaver employee contributions (default 3.5% from April 2026) are also deducted, reducing actual take-home further.
New Zealand tax: key rules and exceptions
New Zealand has no tax-free threshold. Unlike Australia ($18,200 tax-free) or the UK (£12,570 personal allowance), every dollar of NZ income is taxed from the first one at 10.5%. Even a worker on minimum wage pays income tax on all earnings. The IETC provides a partial offset for earners between $24,000 and $70,000, but at $520/year it is modest compared with the UK or Australian equivalents.
KiwiSaver default contribution rates are increasing. From 1 April 2026, the default employee rate rose from 3% to 3.5% — and will rise again to 4% on 1 April 2028. Employers match 3% (unchanged). This reduces take-home pay but builds retirement savings. New employees are automatically enrolled at the default rate but can opt out within the first 56 days or contribute as little as 3%.
The IETC phase-out zone between $66,000 and $70,000 creates an effective marginal rate of 43% — higher than the 33% rate applying above $78,100. Each dollar earned between $66,000 and $70,000 is subject to the 30% income tax rate plus the loss of 13 cents of IETC, creating a combined 43% effective marginal cost. Earners near $66,000 should be aware of this when evaluating overtime, bonuses, or small pay rises.
How do tax brackets work? (Common misconception)
A common misconception is that earning more can leave you worse off — that crossing into a higher bracket means more of your income gets taxed at a higher rate. This is not how progressive taxation works.
Each bracket applies only to the income that falls within its range. If your income crosses into a higher bracket, only the amount above the threshold is taxed at the higher rate — not your entire income. A higher salary always means higher take-home pay.
Your marginal rate is the rate on your last dollar earned. Your effective rate is total tax divided by gross income — always lower than your marginal rate. See the marginal tax rate and effective tax rate glossary entries.
Calculate your exact New Zealand tax
Enter your income for a full breakdown including all deductions, credits, and social contributions.
Frequently asked questions
- Is there a tax-free threshold in New Zealand?
- No. Unlike Australia (which has an $18,200 tax-free threshold) or the UK (£12,570 personal allowance), every dollar of New Zealand income is taxed from the first one at 10.5%. The IETC provides a $520/year credit for some earners — but this is a credit against tax, not a tax-free threshold.
- What is the IETC phase-out zone and the 43% marginal rate?
- Between $66,000 and $70,000, the IETC phases out at $0.13 per dollar. In the 30% tax bracket, plus 13 cents of IETC lost per dollar, the effective marginal rate is 43%. This means income earned between $66,000 and $70,000 is effectively taxed at a higher rate than income just above $70,000 (where the 30% bracket still applies without the IETC drag). This affects workers near that income range.
- What is the 39% rate and who pays it?
- The 39% top rate applies to income above $180,000. It was introduced from 1 April 2021 (the 2021-22 tax year). For a NZ resident earning $200,000, the 39% rate applies only to the $20,000 above the $180,000 threshold — giving $7,800 in additional tax. The effective rate on $200,000 (including all lower brackets) is approximately 29.7%.
- Are ACC levy and KiwiSaver part of the tax brackets?
- No. The ACC Earner Levy (1.75%, capped at $156,641) and KiwiSaver employee contributions (3.5% default) are separate deductions from your pay — they are not income tax. However, both affect your take-home pay. The total deduction from gross pay for a $70,000 earner includes income tax, ACC levy, and (if enrolled) KiwiSaver contributions.
- When is the NZ tax year and how is PAYE settled?
- The NZ tax year runs 1 April to 31 March. The 2026-27 year covers 1 April 2026 to 31 March 2027. For most employees, PAYE automatically deducts the correct tax each pay period. IRD may issue an income tax assessment ("square up") after the year end if there are small over- or underpayments — especially if you have had multiple jobs or income sources during the year.