ACT 2026 Tax Policy: KiwiSaver Tax Cut Explained

This is an election proposal, not current law. ACT published its fiscal plan, “Cut the Waste, Grow the Country”, on 11 October 2026, ahead of the 7 November 2026 general election. It would only take effect if ACT were part of the next government and Parliament legislated it. New Zealand’s tax settings, including KiwiSaver’s, remain as they are today either way.

ACT has long argued for lower, flatter income tax, and its 2026 plan still names that as the goal. What it actually costs is different: it puts broad tax cuts off until the budget is back in surplus and costs a handful of targeted changes instead. The largest by far is removing tax on KiwiSaver investment earnings, paid for partly by ending the Government Contribution for most employees. This page sets out what the plan says, what that would mean for a KiwiSaver member, and what the plan leaves open.

No broad income tax cuts this time

The plan is explicit:

“While broad-based tax cuts are not in ACT’s Fiscal Plan, several strategic tax cuts are. These targeted changes are funded by the Plan’s savings, rather than additional borrowing, while bringing the return to surplus forward.”

The longer-term goal is still there, but sequenced behind the surplus: “Our priority is to balance the books with no new taxes, then deliver large-scale, broad-based tax relief,” and the plan describes itself as “laying the groundwork for much lower, flatter taxes in the future”.

What the plan does not contain is any rate or bracket. That matters because two different ACT figures for a flatter system have circulated: a 28% top rate in older ACT statements, and a 33% top rate in ACT’s 2023 Alternative Budget. Neither appears in the 2026 plan, so neither is ACT’s 2026 policy. Income-tax rates and thresholds would stay as they are under this plan.

Removing tax on KiwiSaver earnings

The headline measure:

“ACT will remove tax on qualifying investment earnings inside KiwiSaver funds. Tax taken from a return today also removes the returns that money could earn in future. Letting earnings stay invested gives savers the full benefit of compounding and helps them build retirement savings without requiring them to give up more take-home pay.”

Today, KiwiSaver funds are portfolio investment entities (PIEs). The fund calculates its taxable income and deducts tax for each member at that member’s prescribed investor rate (PIR), which for New Zealand residents is 10.5%, 17.5% or 28% depending on income in the two previous income years. The tax comes out of the member’s balance, which is the “tax taken from a return today” the plan refers to.

ACT’s costing puts the revenue loss at $1.065 billion in 2027/28, rising to $1.437 billion in 2030/31 as balances grow. It is the largest single line in the plan’s tax changes.

The plan does not define “qualifying investment earnings”. Until it does, it is not possible to say whether every kind of fund income would be covered, or how the change would interact with the rules that set a fund’s taxable income in the first place.

Ending the Government Contribution for most employees

The tax cut is partly funded from KiwiSaver itself:

“ACT will replace the annual Government Contribution for members receiving employer contributions with relief from tax on qualifying investment earnings. This redirects support towards leaving savers’ own returns invested, where they can compound over time.”

The Government Contribution is today 25 cents for every dollar a member contributes between 1 July and 30 June, up to $260.72 a year, for members aged 16 to 65 with taxable income of $180,000 or less. ACT counts removing it for members with employer contributions as a saving of $516 million in 2027/28, rising to $589 million in 2030/31.

The wording matters for who is affected. The replacement applies to “members receiving employer contributions”. Members with no employer contribution, which includes many self-employed people and people not in paid work, fall outside it, so on the plan as published they would keep the Government Contribution and also get the tax relief.

What it would mean for a KiwiSaver member

For an employee, the two halves pull in opposite directions. The tax saving scales with the balance; the Government Contribution lost is capped at $260.72. Where they cross depends on the balance and the PIR.

The table below is illustrative. It assumes the fund’s taxable income is 5% of the balance in a year. Real funds differ: the taxable income of a fund holding overseas shares is set by tax rules rather than by its actual return, and it varies by fund type.

Against a lost Government Contribution of up to $260.72, an employee on the same 5% assumption comes out ahead from a balance of roughly $18,600 on the 28% PIR, $29,800 on 17.5% and $49,700 on 10.5%. Below those balances, the employee loses more than they save. Members who were not receiving the full Government Contribution lose less, so their break-even balance is lower.

Two patterns follow. The change favours members with larger balances and higher PIRs, and it shifts value away from employees early in their savings lives, who are the members for whom the Government Contribution is largest relative to their balance. Members with no employer contribution gain either way.

To see your own balance and contributions, use the KiwiSaver calculator.

The other tax changes

The plan costs four smaller tax measures:

• Carbon Tax Refund. “ACT will return net carbon auction revenue to New Zealanders through a Carbon Tax Refund”, which the plan puts at “an estimated $100 per household at current prices”. Costed at $200 million in 2027/28, falling to $37 million by 2030/31.
• Uncapped donation tax credit. “ACT will reintroduce an uncapped donation tax credit.” The donation tax credit is a third of qualifying gifts, limited today to the donor’s taxable income. The Taxation (Budget Measures) Act 2026 adds a $100,000 cap on gifts made on or after 1 April 2027; ACT would remove it. Costed at $15 million in 2027/28 and $19 million a year after that.
• Crypto tax rules. “ACT will establish clearer tax rules for digital assets, including a 12-month bright-line rule for qualifying personal investments and an exemption for low-value purchases. Professional traders and businesses will continue to be taxed under existing rules.” Costed at $24 million in 2027/28.
• Tax relief still to come. “There is additional targeted tax relief to be announced costing $264 million in the first year.” The plan does not say what it is.

How the plan pays for it

ACT’s tax changes reduce revenue by $1.569 billion in 2027/28. The plan funds them, and more, from spending: returning spending outside protected frontline services to 2017 levels per person, reducing foreign aid, gradually raising the superannuation age, restricting benefits for new residents and the KiwiSaver Government Contribution change above. It claims net core Crown debt $12.4 billion lower by 2031 than Treasury forecasts and an operating surplus (OBEGAL) of $5.1 billion in 2028/29.

These are ACT’s own costings. They have not been independently audited, and the savings depend on spending decisions that a coalition government would have to agree to.

What the plan does not propose

• No new taxes. The plan’s stated aim is to “balance the books with no new taxes”. ACT has long opposed a capital gains tax and a wealth tax, and the plan proposes neither.
• No change to income-tax rates or brackets. Broad cuts are deferred until surplus; no figures are given.
• No change to the KiwiSaver contribution rates for employees or employers. The plan changes how earnings are taxed and who receives the Government Contribution, not what members and employers pay in.

Where this sits in the campaign

ACT shares the no-new-taxes position with National and New Zealand First, and like National it has put broad income-tax cuts behind a return to surplus. Its distinctive offer is the KiwiSaver change. Opportunity also proposes KiwiSaver tax changes, but its KiwiSaver 2.0 exempts contributions to a new compulsory scheme, whereas ACT’s plan removes tax on the earnings of today’s funds (see Opportunity’s tax reset explained). For how National frames the same ground, see National’s 2026 tax policy explained. For all seven parties side by side, see every party’s 2026 tax policy compared.