NZ Tax Rate Changes for 2025-26: What You Need to Know
A full breakdown of New Zealand income tax brackets and rates for the 2025-26 tax year, including the confirmed 39% top rate and a comparison with 2024-25.
Published 22 March 2026 · Updated 25 April 2026 · Reviewed by NZTaxTools editorial team
The 2025-26 New Zealand tax year runs from 1 April 2025 to 31 March 2026. The headline change this year is an adjustment to the income tax bracket thresholds — the five tax rates remain the same, but the income bands have been widened, providing a modest tax cut for most earners. This article sets out every bracket, explains what each rate means in practice, and compares the position with 2024-25 so you can see exactly what has changed.
The 2025-26 Income Tax Brackets
New Zealand uses a progressive tax system. Each bracket applies only to the slice of income that falls within its range — not to your entire income.
| Income range | Tax rate |
|---|---|
| $0 – $15,600 | 10.5% |
| $15,601 – $53,500 | 17.5% |
| $53,501 – $78,100 | 30% |
| $78,101 – $180,000 | 33% |
| Over $180,000 | 39% |
What the 39% top rate actually means
The 39% rate applies only to every dollar earned above $180,000. It does not claw back the lower rates already paid on earlier slices of income. A person earning $200,000, for example, pays 39% on just $20,000 — the amount above the $180,000 threshold.
This rate was introduced on 1 April 2021 and has now been confirmed for 2025-26. It sits alongside the 33% rate on income between $78,101 and $180,000, creating a meaningful gap between those two top brackets that can influence decisions around salary sacrifice, KiwiSaver contributions, and trust distributions.
2024-25 vs 2025-26: Side-by-Side Comparison
The five tax rates are unchanged, but the bracket thresholds have been widened for 2025-26:
| Income range (2024-25) | 2024-25 rate | Income range (2025-26) | 2025-26 rate | Change |
|---|---|---|---|---|
| $0 – $14,000 | 10.5% | $0 – $15,600 | 10.5% | Threshold up $1,600 |
| $14,001 – $48,000 | 17.5% | $15,601 – $53,500 | 17.5% | Threshold up $5,500 |
| $48,001 – $70,000 | 30% | $53,501 – $78,100 | 30% | Threshold up $8,100 |
| $70,001 – $180,000 | 33% | $78,101 – $180,000 | 33% | Threshold up $8,100 |
| Over $180,000 | 39% | Over $180,000 | 39% | Unchanged |
The wider brackets mean more of your income is taxed at lower rates, resulting in a small tax reduction for most earners. For someone on $80,000, the 2025-26 brackets save roughly $1,000 per year compared to 2024-25.
Other deductions and levies that interact with PAYE have also shifted. The ACC earner’s levy rate increased from 1.60% to 1.67%, and the cap rose from $142,283 in 2024-25 to $152,790 in 2025-26.
How PAYE Works With These Brackets
PAYE (Pay As You Earn) is the system your employer uses to withhold income tax from your wages. IRD calculates withholding based on the tax code you supply on an IR330 form. For most employees on a primary job, the code is simply M (or M SL if you have a student loan).
Your employer applies the relevant marginal rate to each pay period, estimating your annual income and withholding the correct portion. Because the calculation is done progressively, you should receive roughly the right amount withheld across the year with no large bill at tax time — as long as your tax code is correct and you don’t have significant other income.
If you work multiple jobs, dividends, rental income, or other income sources outside PAYE, you may need to file an IR3 tax return by 7 July 2026 (or by your tax agent’s extension date).
Effective Tax Rates at Key Income Levels
The effective tax rate is the average rate paid across your whole income — lower than the marginal rate because the lower brackets are taxed at lower rates.
| Annual income | Income tax payable | Effective rate |
|---|---|---|
| $20,000 | $2,408 | 12.0% |
| $40,000 | $5,908 | 14.8% |
| $60,000 | $10,220.50 | 17.0% |
| $80,000 | $16,277.50 | 20.3% |
| $100,000 | $22,877.50 | 22.9% |
| $150,000 | $39,377.50 | 26.3% |
| $200,000 | $57,077.50 | 28.5% |
Note: figures above are income tax only and exclude the ACC earner’s levy and any student loan repayments.
Independent Earner Tax Credit (IETC)
One relief measure that interacts with the brackets is the Independent Earner Tax Credit. If your annual income falls between $24,000 and $70,000 and you don’t receive Working for Families tax credits, you may qualify for up to $520 per year. The full credit applies from $24,000 to $66,000, then abates at 13 cents per dollar above $66,000, reaching zero at $70,000.
Ask your employer to apply the ME tax code to your PAYE if you believe you qualify.
Other PAYE Deductions for 2025-26
The income tax rates are the primary rate structure for PAYE purposes, but your net pay also depends on:
- ACC earner’s levy: 1.67% on the first $152,790 of earnings in 2025-26 (up from 1.60% on $142,283 in 2024-25)
- Student loan: 12% on income above the $24,128 repayment threshold
- KiwiSaver: 3%, 4%, 6%, 8%, or 10% employee contributions (your choice)
These are addressed in separate articles in this series.
Planning Around the 39% Rate
If your income is likely to exceed $180,000 in 2025-26 — whether from salary, dividends, trust distributions, or a combination — there are a few legitimate strategies worth discussing with a tax adviser:
- Salary sacrifice into KiwiSaver: Contributions come from pre-tax income and effectively reduce your PAYE taxable income (though employer contributions are subject to Employer Superannuation Contribution Tax, or ESCT).
- PIE investments: Portfolio Investment Entity returns are capped at a Prescribed Investor Rate (PIR) of 28%, providing a tax advantage over the 33% or 39% rates that would otherwise apply to investment income.
- Timing of bonus payments: A bonus paid in early April falls into the next tax year, which can be relevant to year-end planning.
- Trust structures: Trusts now pay a flat 39% rate on retained income, removing a previous incentive. See the separate article on trust tax planning for the 2025-26 position.
Key Dates for the 2025-26 Tax Year
- 1 April 2025: Tax year begins
- 31 March 2026: Tax year ends
- 7 July 2026: Individual IR3 return due date (standard)
- 7 February 2027: Extended due date for returns filed through a tax agent
For provisional taxpayers, additional instalment dates apply. Refer to the separate article on IRD key dates for a complete schedule.
Summary
The 2025-26 New Zealand income tax brackets feature the same five rates as 2024-25 but with wider thresholds — the first three boundaries have increased from $14,000/$48,000/$70,000 to $15,600/$53,500/$78,100. This means most earners will pay slightly less income tax than in 2024-25. If your income sits near or above the $180,000 threshold, reviewing your tax planning with an adviser before the end of the tax year on 31 March 2026 is worthwhile.
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