NZ Budget 2026 Summary: IWTC +$50/wk Boost, KiwiSaver 3.5%, Donation Cap $100k

Hon Nicola Willis, Minister of Finance, delivered the Coalition government’s third Budget on Thursday 28 May 2026 at 2:00 pm NZST. From a personal-finance standpoint the Budget contains four substantive changes and a long list of things that stayed exactly the same. Everything below is sourced from the official Treasury Budget at-a-Glance, the IRD Tax Policy post-Budget summary, and the IRD information sheet on the in-work tax credit — not from news coverage.

For the live calculator-by-calculator status dashboard, see the Budget 2026 hub. To estimate your specific annual dollar impact in under 30 seconds, use the Budget 2026 Net Impact Calculator.

Headline at a glance

Four substantive personal-finance changes:

1. Temporary $50/week IWTC boost — base in-work tax credit lifts from $97.50 to $147.50/week for 2026-27 only.
2. Working for Families CPI uplift — FTC and Best Start weekly amounts step up with inflation effective 1 April 2026.
3. KiwiSaver 3.5% step now confirmed effective 1 April 2026 — Stage 2 to 4% deferred to 1 April 2028. 16- and 17-year-olds become eligible for compulsory employer contributions.
4. New caps on donation tax credit ($100k/year) and a lift in the NFP tax-free income threshold ($1k → $10k).

What did not change: PAYE thresholds (still frozen), IETC ($10/week explicitly retained — a lift was rejected), KiwiSaver government member contribution (stays at $260.72), student loan repayment threshold ($24,128), ACC earner levy (1.75% / $156,641 cap), 2-year BrightLine, FIF $50k de-minimis, and GST 15%.

1. In-Work Tax Credit: $97.50 → $147.50 per week (TEMPORARY)

The biggest single change for working families. The IWTC base rate increases by $50/week to $147.50/week, lifting the annual entitlement from $5,070 to $7,670 for families with 1-3 dependent children.

Effective date: 1 April 2026. First payment for weekly recipients: Tuesday 7 April 2026. First fortnightly payment: 14 April 2026.

Critical caveat — it’s temporary: The boost runs for one year OR until the price of 91-octane petrol drops below $3/L for four consecutive weeks, whichever comes first. From 1 April 2027 the rate reverts to $97.50/week unless legislation is renewed.

Who benefits: IRD modelling forecasts ~143,000 families will receive the full $50/week and a further ~14,000 will become newly eligible at abated amounts as the higher base pushes eligibility further up the income scale. Income range affected: $0 to roughly $180,000 family income (depending on number of children).

Family-income examples showing the broad reach:

Family income	Receive full $50/wk	Receive partial (abated)
Less than $40,000	15,700	0
$40,000 – $50,000	14,160	0
$50,000 – $60,000	18,570	20
$60,000 – $70,000	20,850	230
$70,000 – $80,000	20,730	110
$80,000 – $90,000	18,450	350
$90,000 – $100,000	10,960	5,470
$100,000 – $110,000	9,720	590
$110,000 – $120,000	5,960	3,850
$120,000+	8,070	3,820

Eligibility: families with dependent children where at least one parent is in paid employment (employee or self-employed) and neither parent receives a main benefit from Work and Income. The $15/week-per-extra-child rate for families with four or more children is unchanged.

Use the Working for Families calculator with the 2026-27 toggle to see your boosted entitlement.

2. Family Tax Credit + Best Start CPI uplift

These were CPI-indexed adjustments scheduled in legislation; Budget 2026 confirmed the dollar amounts.

Component	2025-26	2026-27 (from 1 April 2026)
FTC eldest child	$7,524/yr ($144.70/wk)	$7,921/yr ($152.30/wk)
FTC subsequent children	$6,130/yr ($117.90/wk)	$6,454/yr ($124.10/wk)
Best Start	$3,838/yr ($73.80/wk)	$4,041/yr ($77.70/wk)
WfF abatement threshold	$42,700	$44,900 (locked by Budget 2025)
WfF abatement rate	27%	27.5% (locked by Budget 2025)
MFTC	$679/wk net ($35,316/yr)	$703/wk net ($36,604/yr) (uplift via Income Tax (Tax Credit) Order 2025, not a Budget 2026 line item)

The WfF abatement threshold + rate were already locked by the Budget 2025 Regulatory Impact Statement (signed 4 April 2025); Budget 2026 simply confirms the 1 April 2026 effective date.

Best Start year-1 income-testing: From 1 April 2026 Best Start becomes income-tested at $79,000 / 21% abatement for the first year (it was previously universal for the first year). The second and third years were already income-tested at the same threshold.

3. KiwiSaver: 3.5% step confirmed, 16-17 year-olds now eligible

The KiwiSaver auto-step continues but on a more drawn-out timeline than earlier 2025 legislation suggested:

Item	From 1 April 2026	From 1 April 2028
Default employee contribution	3.5%	4.0%
Employer minimum match	3.5%	4.0%
Government member contribution	$260.72/year (no change)	TBD
Compulsory employer contributions for 16-17 year-olds	NEW — now eligible	—

The earlier Budget 2025 legislation aimed at 4% from 1 April 2026 — Budget 2026 effectively deferred Stage 2 by two years, keeping the 2026-27 rate at 3.5%. Schools receive funding to cover the increased employer contributions.

The $260.72 government member contribution is unchanged — halved from the pre-Budget-2025 $521.43 level — and no restoration was announced.

See the KiwiSaver calculator for projections at the new rate.

4. Donation tax credit: new $100,000 annual cap

Previously the donation tax credit had no dollar cap — eligible donations were limited only by the donor’s taxable income, with the credit calculated at 33.33% of eligible donations.

From 1 April 2026 an annual $100,000 cap on eligible donations applies. The credit rate stays at 33.33%, so the maximum annual credit any individual can claim becomes $33,333.33 (= $100,000 × 1/3).

The cap binds only on very high-income donors making large charitable contributions. Most filers — whose annual donations are typically under $10,000 — see no change.

See the donation tax credit calculator for the per-bracket impact.

5. Not-for-profit income threshold: $1,000 → $10,000

The amount of net income a not-for-profit organisation can earn each year before it has to pay tax has been increased from $1,000 to $10,000. Membership subscriptions and levies received by NFPs remain non-taxable.

This change targets the administrative burden on small clubs, societies, and community groups — the threshold has been at $1,000 for years and was being eroded by inflation. Effective from the start of NFP tax years beginning on or after 1 April 2026.

What stayed the same

PAYE thresholds frozen. The Budget 2024 cuts already legislated remain — $15,600 / $53,500 / $78,100 / $180,000 / 39% with no inflation indexation announced. Fiscal drag (bracket creep) continues to lift effective tax rates as nominal incomes rise.

IETC retained at $10/week. Treasury explicitly considered and rejected a $5/week IETC lift, citing $230M-$560M cost for $5-10/week respectively, plus a 3-month payroll-system lead time meaning 75% of recipients (who choose year-end receipt) wouldn’t see anything until June 2027.

Student loan repayment threshold $24,128 + 12% rate retained. No CPI indexation announced.

ACC earner levy retained at 1.75% on earnings up to $156,641 (max levy $2,741.22). ACC operates on a separate annual cycle from Budget; no Budget 2026 amendment.

BrightLine 2 years retained. No restoration to the longer 10-year period.

FIF $50,000 de-minimis retained. FDR / Comparative Value / Cost methodology unchanged.

GST 15% retained — untouched since 2010.

Cost-of-living adjustments effective 1 April 2026

Separate from Budget 2026 announcements but taking effect the same day:

• NZ Superannuation: married-couple rate increases more than $50/fortnight to $1,708.16 (M tax code).
• Main benefits: 436,400 working-age beneficiaries see CPI adjustments.
• Family Tax Credit (covered above) and Best Start CPI-indexed for 282,000 families.
• Student allowance: single student 24+ not living with a parent rises >$11/week to $380.43.
• Jobseeker Support couple with children: rises >$20/week to $669.40.
• Sole Parent Support: rises >$15/week to $521.52.

Around 1.5 million New Zealanders receive at least one of these automatic adjustments.

What this means for your tax planning

For most filers, the practical net effect of Budget 2026 is:

• Working families with kids: noticeable increase via the temporary $50/week IWTC plus standard WfF CPI uplift. Re-run the calculator.
• KiwiSaver members: confirm your contribution rate hasn’t auto-stepped past 3% if you’re an existing member (default is 3% unchanged for current members; new enrolments default to 3.5%).
• High-income charitable donors: be aware of the new $100k cap if your annual giving exceeds it.
• Everyone else: PAYE, ACC, student loan, GST — no change. Fiscal drag continues to do the work that bracket cuts would have done.

Calculators updated to 2026-27 Budget values

• Take-home pay calculator — full PAYE/ACC/KiwiSaver/student loan
• PAYE calculator — bracket-by-bracket breakdown
• KiwiSaver calculator — employer + employee + government
• Working for Families calculator — FTC / IWTC ($147.50 boost) / Best Start / MFTC
• Donation tax credit calculator — $100k cap modelled
• Student loan calculator — repayment projection
• IR3 tax refund estimator — full-year reconciliation
• Tax rates 2026-27 table — quick reference

Switch the tax-year selector to 2026-27 on any calculator to see the new numbers.