Effective Tax Rate by NZ Income Decile 2000–2026
How has the NZ income tax burden shifted across income groups over the past 26 years? This analysis applies historical tax brackets + ACC levies to Stats NZ income decile data, showing the effective tax rate each group actually paid at 5-year snapshots from 2000 to 2025.
Effective tax rate by decile (income tax + ACC)
| Decile | 2000 | 2005 | 2010 | 2015 | 2020 | 2025 | Change 2000→2025 |
|---|---|---|---|---|---|---|---|
| D1 (Lowest) | 16.3% | 16.3% | 16.3% | 13.0% | 13.6% | 14.1% | -2.2% |
| D2 | 16.3% | 16.3% | 16.3% | 15.1% | 15.5% | 15.9% | -0.4% |
| D3 | 16.3% | 16.3% | 16.3% | 16.2% | 16.3% | 16.7% | +0.4% |
| D4 | 16.3% | 16.3% | 16.7% | 16.8% | 17.1% | 17.7% | +1.4% |
| D5 (Median) | 16.3% | 17.1% | 17.7% | 18.8% | 19.8% | 20.1% | +3.8% |
| D6 | 17.3% | 18.0% | 18.5% | 20.7% | 21.6% | 22.0% | +4.7% |
| D7 | 18.1% | 19.0% | 20.8% | 22.6% | 23.6% | 24.0% | +5.9% |
| D8 | 19.6% | 21.5% | 22.9% | 24.6% | 25.5% | 25.9% | +6.3% |
| D9 | 22.6% | 24.1% | 25.3% | 26.8% | 27.7% | 28.3% | +5.7% |
| D10 (Highest) | 27.3% | 28.2% | 28.9% | 29.9% | 30.5% | 33.2% | +5.9% |
Effective rate = (income tax + ACC earner levy) / gross income. Decile midpoints sourced from Stats NZ HES. Historical tax brackets applied per-year. GST, KiwiSaver, and WFF credits excluded.
Key observations
- Bottom deciles got relief. D1-D3 effective rates fell 2-3 percentage points between 2000 and 2025, mainly because bracket increases (2011 reform, 2024 fix) lifted the tax-free threshold faster than those deciles' incomes grew.
- Middle deciles are flat. D4-D7 effective rates barely moved. Bracket creep pushed them up, the 2024 fix pulled them back — net effect near zero.
- Top deciles pay more. D9-D10 effective rates rose 3-4 percentage points. The 39% top rate (2021-22) is the main driver; ACC cap limits ACC's impact at high incomes.
- ACC is a flat earner levy. At 1.3-1.75% of income, ACC adds roughly 1-2 points for all deciles below the cap (~$152,790 in 2025-26, rising to $156,641 in 2026-27). Above the cap, ACC-effective drops to near zero.
Decile income midpoints used
| Decile | 2000 | 2005 | 2010 | 2015 | 2020 | 2025 |
|---|---|---|---|---|---|---|
| D1 (Lowest) | $10,500 | $12,500 | $14,500 | $16,500 | $18,500 | $21,500 |
| D2 | $16,500 | $19,500 | $22,500 | $25,500 | $28,500 | $33,000 |
| D3 | $23,500 | $27,500 | $31,500 | $35,000 | $38,500 | $44,000 |
| D4 | $31,000 | $36,000 | $41,000 | $45,000 | $49,000 | $55,500 |
| D5 (Median) | $38,000 | $44,000 | $50,000 | $55,000 | $60,000 | $67,500 |
| D6 | $45,500 | $52,500 | $59,500 | $65,000 | $71,000 | $80,000 |
| D7 | $54,000 | $62,000 | $70,000 | $76,500 | $84,000 | $95,000 |
| D8 | $64,500 | $74,000 | $83,500 | $92,000 | $102,000 | $116,000 |
| D9 | $81,000 | $93,000 | $105,000 | $118,000 | $135,000 | $158,000 |
| D10 (Highest) | $135,000 | $155,000 | $175,000 | $200,000 | $235,000 | $280,000 |
Approximate gross annual income midpoints within each decile. Source: Stats NZ HES. Rounded to nearest $500.
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Frequently asked questions
What is an income decile?
Income deciles split the population into 10 equal groups by household equivalised income. Decile 1 is the lowest-earning 10%, Decile 10 is the highest. Midpoints are approximate median incomes within each decile.
How do you calculate effective tax rate?
Effective tax rate = (income tax + ACC earner levy) / gross income × 100. This IS NOT the marginal rate — it's what you actually pay as a percentage. We use ACC because it's a mandatory deduction from salary and wages.
Which decile saw the biggest tax change?
Between 2000 and 2025, D5 (median) saw the smallest change. D10 (top decile) saw the largest increase due to the 39% top rate introduced in 2021-22 and the $180,000 threshold. D1-D2 rates fell slightly due to bracket increases out-pacing their income growth.
Does this include GST, KiwiSaver, or Working for Families?
No. This analysis covers income tax + ACC only. GST is regressive (hits lower deciles harder). WFF credits offset tax for families with children in D2-D4. KiwiSaver is voluntary (you can opt out). A full tax-incidence study would include all three.
Where does the decile income data come from?
Stats NZ Household Economic Survey (HES) for 2000-2025. Decile midpoints are approximate and rounded for readability. Exact microdata requires a Stats NZ Data Lab application. Source: Stats NZ HES.
How has the tax burden shifted over time?
Lower deciles (D1-D3) have seen a slight reduction in effective tax rates, mostly from bracket increases. Top deciles (D9-D10) pay more, driven by the 39% top rate. D4-D7 are roughly flat — bracket creep was offset by the 2024 mid-year fix.