Understanding NZ Income Tax Rates: A Complete Guide

New Zealand uses a progressive income tax system, meaning different portions of your income are taxed at different rates. Understanding how this works helps you plan your finances and avoid surprises at tax time.

The 2025-26 and 2026-27 Tax Brackets

For the 2025-26 tax year (1 April 2025 – 31 March 2026), the income tax rates are:

These same rates and thresholds are frozen and continue unchanged into the 2026-27 tax year (1 April 2026 – 31 March 2027) — Budget 2026 made no further change to the personal income tax scale.

The five rates were last changed on 31 July 2024, partway through the 2024-25 tax year, when the thresholds moved from $14,000/$48,000/$70,000 to the current $15,600/$53,500/$78,100. Because the change landed mid-year rather than at 1 April, the 2024-25 year itself used temporary blended rates to average the old and new brackets; the clean thresholds shown above have applied in full since 1 April 2025 (the start of 2025-26).

No Personal Allowance

Unlike Australia (which has an $18,200 tax-free threshold) or the UK (with a £12,570 personal allowance), New Zealand has no personal allowance. Tax applies from the very first dollar of income.

How Progressive Tax Works

The most important thing to understand is that each rate applies only to the income within that bracket — not your entire income.

Example: $80,000 income

• $15,600 × 10.5% = $1,638
• $37,900 × 17.5% = $6,632.50
• $24,600 × 30% = $7,380
• $1,900 × 33% = $627
• Total tax = $16,277.50

Your effective tax rate is $16,277.50 ÷ $80,000 = 20.35% — not 33%, even though 33% is your marginal rate.

Effective Rate vs Marginal Rate

• Effective rate: Total tax ÷ gross income. Reflects your actual average tax burden.
• Marginal rate: The rate that applies to your next dollar of income. Relevant when deciding whether to take on extra work.

Tax is Collected via PAYE

For employees, income tax is collected automatically through the PAYE (Pay As You Earn) system. Your employer calculates and deducts the right amount from each pay, using your IRD number and tax code.

Most employees don’t need to file a tax return. IRD may send you a tax assessment (formerly a personal tax summary) showing whether you owe more tax or are due a refund.

Key Dates

• 31 March: End of NZ tax year
• 1 April: Start of new tax year
• 7 July: Deadline to file individual income tax return (IR3)

Use our NZ Income Tax Calculator to see your exact tax breakdown.