NZ Budget 2026
Budget night dashboard. 15 tax and benefit measures we tracked around the Thursday 28 May 2026 announcement, with the outcome of each, plus locked 2026-27 changes that take effect 1 April regardless.
Budget 2026 delivered Thursday 28 May 2026 at 2:00 pm NZST
Substantive personal-finance changes: the $100k donation tax credit cap (enacted, from 1 April 2027); a Working for Families simplification package (enacted; eligibility and income-definition changes only, no payment-rate moves, from 2027-28); and two proposals still before Parliament - a not-for-profit threshold lift from $1k to $10k (2027-28) and a FIF de minimis lift from $50k to $100k (2026-27). KiwiSaver 3.5% from 1 April 2026 was a Budget 2025 decision. The temporary $50/wk IWTC boost and the FTC + Best Start CPI uplift landing the same day were both decided before the Budget — the IWTC on 24 March 2026, the FTC/Best Start uplift six months earlier — and aren't Budget measures. PAYE / IETC / student loan / ACC / BrightLine / GST unchanged. Read the full Budget 2026 summary or jump into the deep-dive cluster below.
Personalise your number
What's Budget 2026 worth to you?
The Net Impact Calculator combines IWTC boost + FTC/Best Start CPI uplift + KiwiSaver employer match + donation cap into one annual figure with a per-change breakdown — under 30 seconds with your salary, family situation, and KiwiSaver status.
Budget 2026 deep dives
One article per substantive change, plus the macro framing. Each has a calculator link so you can model the dollar impact at your numbers.
Overview
Budget 2026 summary
Three changes, what stayed the same, plain-English walkthrough with worked examples.
Working families
IWTC $50/wk boost
$97.50 → $147.50/wk temporarily. 143,000 families full boost, 14,000 newly eligible. Petrol-price trigger and expiry.
Retirement
KiwiSaver: 3.5%, Stage 2 to 2028, 16-17yo eligibility
Three concrete changes, MTC stays at $260.72, what employers and employees need to do.
Philanthropy
Donation $100k cap
Max annual donation tax credit becomes $33,333. Couple-splitting, family-foundation routing, bequest planning.
Clubs & societies
NFP $10,000 threshold
$1,000 → $10,000 net income tax-free for not-for-profits. ~3,000 small clubs no longer file IR9.
Income tax
PAYE freeze + fiscal drag
Why brackets stayed put, what bracket creep is costing you, why Treasury rejected even a $5/wk IETC lift.
Budget 2026 in context — what the big themes mean for you
The headlines were macro — an operating allowance of about $2.4b a year (net package $2.1b), $1.7b of savings and revenue, and no broad tax cuts, with Treasury now forecasting a surplus in 2028/29, a year earlier than before. Here's how each lands on a household budget, with the tool to check your number.
Public-sector savings drive
Most agencies are delivering baseline savings from 2026/27, with deeper cuts planned. If you're made redundant, severance is taxed as income and you may qualify for Jobseeker Support.
No tax cuts → fiscal drag
With PAYE thresholds frozen, a pay rise that just tracks inflation still pushes more income into higher brackets — bracket creep lifts your real tax rate.
Cost-of-living cushions
A tight allowance means existing supports do the work, not new relief. Make sure you're claiming what you're already entitled to.
The road back to surplus
Treasury now forecasts a surplus in 2028/29, a year earlier than previously expected, and the Government is prioritising debt control over spending. For households that means status-quo tax settings — run your 2026-27 baseline now.
Watch list — 15 measures
Income tax
PAYE thresholds
No changeCurrent: $15,600 / $53,500 / $78,100 / $180,000 (10.5/17.5/30/33/39%)
What to watch: Likely unchanged (Budget 2024 cuts already legislated). Watch for indexation announcement.
Outcome: Frozen at 2025-26 levels. No indexation announcement. Fiscal drag (bracket creep) continues.
IETC abatement thresholds
No changeCurrent: Abatement starts $66,000, ends $70,000; 13c per $
What to watch: Possible adjustment to abatement floor.
Outcome: IETC retained at $10/week for $24,000-$70,000 earners. A $5/week lift was explicitly rejected by Treasury as costing $230M-$560M with delayed payroll-system delivery (3+ months), and 75% of recipients receive at year-end anyway.
KiwiSaver
Employer minimum match
ConfirmedCurrent: 3% (2025-26) → 3.5% (2026-27 legislated)
What to watch: Confirm the legislated 3.5% step still applies; watch for further lift.
Outcome: 3.5% from 1 April 2026 and 4% from 1 April 2028, both legislated by the Taxation (Budget Measures) Act 2025 (a Budget 2025 decision; Budget 2026 changed nothing here). 16- and 17-year-olds also became eligible for compulsory employer contributions from 1 April 2026 (Budget 2025).
Default employee contribution rate
ConfirmedCurrent: 3% (2025-26) → 3.5% legislated from 1 April 2026
What to watch: Confirm the Stage 1 auto-step still applies, and whether Stage 2 holds its date.
Outcome: Default employee rate 3.5% from 1 April 2026 and 4% from 1 April 2028, both set by Budget 2025 and unchanged by Budget 2026. Schools receive Budget 2026 funding to cover the increased employer contributions.
Government member contribution
No changeCurrent: $260.72 / year (halved from $521.43 in Budget 2025)
What to watch: Restoration would cost money, so unlikely in a tight savings Budget — but the most-watched item; could move either way.
Outcome: $260.72/year retained. No restoration toward the pre-2025 $521.43.
Working for Families
FTC / IWTC / Best Start weekly amounts
ConfirmedCurrent: FTC $144 first / $117 subsequent, IWTC $97.50 base, Best Start $73/wk
What to watch: Possible CPI uplift in 2026-27 dollar amounts (abatement threshold + rate are already locked separately for 2026-27 — see locked section).
Outcome: FTC eldest $7,524 → $7,921/yr ($144.69 → $152.33/wk). FTC subsequent $6,130 → $6,454/yr ($117.88 → $124.12/wk). Best Start $3,838 → $4,041/yr ($73.81 → $77.71/wk). PLUS a TEMPORARY $50/wk IWTC base lift to $147.50/wk for 2026-27 ONLY (reverts to $97.50 from 1 April 2027 or earlier if 91-octane petrol drops below $3/L for 4 consecutive weeks). ~143k families receive full $50; ~14k newly eligible at abated amounts.
TEMPORARY $50/wk IWTC boost (NEW)
ConfirmedCurrent: IWTC base $97.50/wk = $5,070/yr
What to watch: Not on pre-Budget watch list.
Outcome: TEMPORARY boost to $147.50/wk ($7,670/yr) for 2026-27 ONLY (1 April 2026 - 31 March 2027). Cost $373M. Targets ~143k low-to-middle-income working families plus ~14k newly eligible. Reverts to $97.50 from 1 April 2027 or earlier if 91-octane petrol < $3/L for 4 consecutive weeks. Legislated via Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Act 2026.
WfF simplification package (NEW)
ConfirmedCurrent: Family scheme income adds back superannuation and retirement-scheme distributions, certain pensions and annuities, income-equalisation deposits and Schedule 38 exempt income; other payments count above a $5,000 de minimis; entitlement turns on a "New Zealand resident" test
What to watch: Not on pre-Budget watch list.
Outcome: A package of Working for Families simplification measures, enacted by ss 7-23 of the Taxation (Budget Measures) Act 2026 (2026 No 25). In force 1 April 2027 and applying for the 2027-28 and later income years, so 2026-27 is untouched. Family scheme income sheds the low-risk adjustments (ss MB 5, MB 6 and MB 10 repealed; main income equalisation account amounts removed from ss MB 1, MB 4 and MB 7; Schedule 38 repealed). The other-payments de minimis in s MB 13(3) rises from $5,000 to $8,000. The employment-benefit (s MB 7B) and non-settlor trust (s MB 12B) adjustments now apply only for an income year the Governor-General specifies by Order in Council, published by 1 December for the year starting the following 1 April. Eligibility moves from a residence test to a presence test: ss MC 5 and MD 7 are replaced so both the principal caregiver and the child must ordinarily reside in AND be present in New Zealand, with a 42-day (six-week) temporary-absence allowance and open-ended exemptions for schooling, sporting or cultural tours, NZ Government service, bereavement, serious illness, medical treatment unavailable here, and overseas criminal proceedings. This changes who qualifies and how family income is measured - no payment rate moves, so no 2026-27 WfF figure changes.
Charitable giving
Donation tax credit $100k annual cap (NEW)
ConfirmedCurrent: No dollar cap (limited only by taxable income, 33.33% credit rate)
What to watch: Not on pre-Budget watch list.
Outcome: Eligible donations for the donation tax credit are capped at $100,000/year from 1 April 2027 (first applies to the 2027-28 tax year; 2026-27 donations are uncapped). Credit rate stays at 33⅓% (max credit $33,333.33). Enacted by s 6 of the Taxation (Budget Measures) Act 2026, which amends Income Tax Act 2007 s LD 1(3); the cap is cumulative with the existing taxable-income limit. Cap binds only on very high-income donors — most filers unaffected. Reduces the abuse opportunity highlighted by IRD in pre-Budget consultation.
Not-for-profit
NFP tax-free income threshold (NEW)
WatchingCurrent: $1,000 of net income before tax obligation
What to watch: Not on pre-Budget watch list.
Outcome: Proposed: the effective tax-free threshold for smaller taxable not-for-profits rises from $1,000 to $10,000 from the 2027-28 income year (not-for-profits with income over $10,000 would not qualify). Membership subscriptions and levies would stay non-taxable from 1 April 2027. A proposal in the Annual Rates 2026-27 Bill (at select committee), not yet law.
Student loan
Repayment threshold (NZ-based)
No changeCurrent: $24,128 / year (12% on income above)
What to watch: Historically flat; could be CPI-indexed.
Outcome: $24,128 threshold and 12% repayment rate retained. No indexation announced.
ACC
ACC earner levy
No changeCurrent: 2026-27: 1.75% on earnings up to $156,641 (max $2,741.22)
What to watch: ACC sets levies on a separate cycle but Budget Estimates reference. Confirm cap.
Outcome: ACC earner levy 1.75% / $156,641 cap retained. ACC operates on a separate annual cycle; Budget 2026 did not amend.
Property
BrightLine test period
No changeCurrent: 2 years (reverted from 10 yrs on 1 Jul 2024)
What to watch: Likely unchanged. Watch for any political signal of restoration.
Outcome: 2-year BrightLine retained. No restoration to longer holding periods.
Investment
FIF $50,000 de-minimis threshold
WatchingCurrent: $50,000 (cost basis, foreign shares)
What to watch: Possible lift to broaden simplified-investor exemption.
Outcome: Proposed: de minimis raised from $50,000 to $100,000 and the revenue account method opened to all NZ residents for unlisted foreign shares, from 1 April 2026 (2026-27 tax year). Still a proposal in the Annual Rates 2026-27 Bill (at select committee); $50,000 remains the law until it is enacted. FDR method unchanged.
GST
GST rate
No changeCurrent: 15%
What to watch: Untouched since 2010. Very unlikely to move.
Outcome: GST 15% retained — untouched since 2010.
Already locked for 2026-27 (regardless of Budget)
- KiwiSaver employer minimum match steps up to 3.5% on 1 April 2026 (from 3%). Step-up to 4% on 1 April 2028 also legislated.
- KiwiSaver default employee rate steps up to 3.5% on 1 April 2026 (from 3%). Members contributing at the 3% default are moved across automatically — employee and employer side both — unless they apply for a temporary rate reduction (92 days to 1 year, renewable). Members who had elected a higher rate keep it.
- Working for Families abatement: threshold lifts to $44,900 (from $42,700) and rate rises to 27.5% (from 27%) on 1 April 2026 — Budget 2025 Regulatory Impact Statement, signed 4 April 2025.
- Best Start first-year payment is now income-tested at the same $79,000 / 21% as years 2-3, for babies born on or after 1 April 2026 (universal first-year retained for babies born before that date).
- PAYE thresholds remain as set by Budget 2024 (effective 31 July 2024): 10.5% / 17.5% / 30% / 33% / 39%.
- BrightLine remains 2 years (reverted from 10 years on 1 July 2024).
- Student loan threshold $24,128, rate 12% unchanged unless Budget announces otherwise.
FAQ
What did NZ Budget 2026 actually change on 28 May?
Budget 2026 (delivered Thursday 28 May 2026) made three substantive personal-finance changes: (1) Donation tax credit capped at $100,000/year eligible donations (max credit $33,333.33) from 1 April 2027 — the 2027-28 tax year; (2) a proposed lift in the not-for-profit tax-free threshold from $1,000 to $10,000 from the 2027-28 income year, which is not yet law; (3) a Working for Families simplification package (ss 7-23 of the Taxation (Budget Measures) Act 2026) that strips the low-risk adjustments out of family scheme income, lifts the other-payments de minimis from $5,000 to $8,000, and replaces the residence test in ss MC 5 and MD 7 with a presence test carrying a 42-day overseas-travel allowance - eligibility and income-definition only, no payment rate moves, and it first applies to the 2027-28 tax year. KiwiSaver's step to 3.5% on 1 April 2026 (and 4% on 1 April 2028) was a Budget 2025 decision. Two more changes land on the same day but were decided before the Budget: the In-Work Tax Credit's temporary $50/week boost to $147.50 for 2026-27 only, announced 24 March 2026 and enacted 30 March 2026 (eight weeks before the Budget); and the Family Tax Credit and Best Start CPI uplift (FTC eldest $152.33, FTC subsequent $124.12, Best Start $77.71), set by the Income Tax (Tax Credit) Order 2025 (SL 2025/260) six months earlier. Both are often listed as Budget measures because their cost was charged against the Budget 2026 operating allowance, but this Budget did not decide either. PAYE, IETC, student loan, ACC, BrightLine and GST settings are unchanged. The Budget also proposes lifting the FIF de minimis from $50,000 to $100,000 from 1 April 2026 (not yet law), increased maximum Accommodation Supplement rates, and FBT motor-vehicle simplification.
Did Budget 2026 cut my income tax?
No. PAYE thresholds stay at $15,600 / $53,500 / $78,100 / $180,000 — unchanged since Budget 2024 (31 July 2024). The IETC was also left at $10/week ($24,000–$70,000 income range); Treasury rejected even a $5/week IETC lift on cost ($230M–$560M) and payroll-system lead time grounds. Fiscal drag (bracket creep) continues to lift effective tax rates as nominal incomes rise. The biggest 2026-27 personal cash gain is the temporary $50/week IWTC boost for working families with kids.
I work in the public service — what does the savings drive mean for me?
The Budget's $1.7 billion of savings and revenue comes mainly from a fundamental overhaul of the public service, ending final-year Fees Free and lower Kāinga Ora construction costs and baseline savings for most agencies from 2026/27. If you're made redundant, redundancy and severance pay is taxed as income in the period you receive it — which can push that pay period into a higher PAYE bracket — and you may qualify for Jobseeker Support while between roles. Use the redundancy tax calculator and Jobseeker Support calculator linked above to work out the after-tax position.
Does Budget 2026 affect my 2025-26 tax return?
No. The 2025-26 NZ tax year ended 31 March 2026 — eight weeks before Budget night. All Budget 2026 measures start from 1 April 2026 (the 2026-27 year, already in progress) or for the NFP threshold from NFP tax years beginning on or after 1 April 2026. Run your IR3 tax refund estimator against the 2025-26 settings — those values are locked.
What's the KiwiSaver Stage 2 timing after Budget 2026?
Stage 1 (3% → 3.5%) landed on 1 April 2026 — both the employer minimum match and the default employee rate. Stage 2 (3.5% → 4%) follows on 1 April 2028. If you were contributing at the 3% default, IRD moved you to 3.5% automatically — for your contribution and your employer's — and you did not have to do anything. To carry on at 3% you have to apply for a temporary rate reduction (92 days to 1 year, renewable as often as you like). If you had already elected a higher rate (4%/6%/8%/10%), your own contribution is unchanged, but your employer's rises to at least 3.5%. Run the KiwiSaver calculator with the 2026-27 toggle for projections.
Where can I read the official Budget documents?
The Budget papers are at budget.govt.nz. Inland Revenue's Budget 2026 information sheets at taxpolicy.ird.govt.nz set out each tax proposal and its start date. Treasury Budget Policy Statement and Estimates Volume 1 (Revenue) are the primary documents.
Official sources
- budget.govt.nz — Budget papers go live 2:00 pm on 28 May
- taxpolicy.ird.govt.nz — IRD post-Budget tax policy summary
- treasury.govt.nz — Treasury Budget Estimates Vol. 1 (Revenue)
Last updated 2026-05-27. This page updates live from 4 pm NZST on 28 May with confirmed Budget values. Calculator URLs use the central tax-year config and switch to 2026-27 automatically when the toggle is set.