New Zealand Individual Tax Rates 2024–2025: A Complete Guide

One of the most common questions we hear from clients — particularly those who are self-employed, have recently had a pay rise, or are structuring their business income — is: how much tax do I actually pay in New Zealand?

The answer is less straightforward than most people think. New Zealand uses a progressive tax system, which means different portions of your income are taxed at different rates. You do not pay the top rate on everything — only on the income above each threshold.

Here is a complete breakdown of how it works.

The current personal income tax rates in New Zealand (applying from 31 July 2024 following the government's tax cuts) are:

These rates apply to your taxable income — your total income after allowable deductions.

This is where many people get confused. If you earn $80,000, you do not pay 33% on all of it. You pay each rate only on the income within that band.

Example: $80,000 salary

Your effective tax rate — the percentage of your total income paid in tax — is $17,320 ÷ $80,000 = 21.65%.

Your marginal tax rate — the rate on your next dollar of income — is 33%.

Understanding the difference between effective and marginal rates matters when you are making decisions about extra income, salary increases, or how to structure business earnings.

Here is what the numbers look like across a range of common income levels:

These figures are approximate and do not include ACC levies, KiwiSaver, or other deductions.

On top of income tax, most New Zealanders pay an ACC earners' levy on their employment income. For 2024–2025, the rate is $1.60 per $100 of liable earnings (1.60%), up to a maximum liable earnings cap of $142,283.

This means the maximum ACC earners' levy is approximately $2,277 per year.

For self-employed people, ACC levies are more complex — you pay both the earners' levy and a work levy based on your industry classification. Self-employed ACC levies can be significantly higher than for employees, and reviewing your levy classification is one of the most commonly overlooked tax savings opportunities.

If you earn between $24,000 and $48,000 and do not receive Working for Families tax credits, you may be entitled to the Independent Earner Tax Credit of up to $520 per year.

The credit phases out between $44,000 and $48,000. It is automatically applied through PAYE for employees who declare their eligibility on their IR330 tax code declaration.

KiwiSaver contributions are not a tax — but they do reduce your take-home pay and are worth including in any income planning.

Employee contribution rates are 3%, 4%, 6%, 8%, or 10% of gross salary. Employer contributions are a minimum of 3% (subject to employer superannuation contribution tax of 10.5%–33% depending on your income).

KiwiSaver contributions reduce your net pay but build long-term wealth. The government also contributes up to $521 per year for members who contribute at least $1,042 of their own money.

If you are self-employed (sole trader, contractor, or partner), you do not have PAYE deducted automatically. Instead, you pay tax through the provisional tax system.

Provisional tax is paid in instalments during the year — typically three payments — based on an estimate of your annual income. At year end, your actual tax liability is calculated and any difference is settled.

Getting provisional tax wrong is one of the most common issues for new self-employed people. Underpaying triggers use-of-money interest. Overpaying ties up cash unnecessarily.

If you are new to self-employment, setting aside 25–30% of every payment you receive into a separate tax account is a practical starting point while you get your first year's return filed.

Your marginal rate — the rate on your next dollar of income — is the rate that should inform business and investment decisions.

Should you take on extra work? If you are earning $90,000, extra income is taxed at 33%. Is the after-tax return worth your time?

Should you pay yourself a higher salary from your company? If your salary pushes you above $70,000, additional salary is taxed at 33% personally. The company pays 28% on retained profits. Leaving money in the company and taking it as dividends later may be more efficient.

Should you contribute more to KiwiSaver? Voluntary contributions reduce your taxable income — effectively giving you a tax saving at your marginal rate.

Should you use a trust or company structure? Trusts are taxed at 33%. Companies at 28%. Depending on your personal rate, one structure may be more efficient than another.

From 31 July 2024, the government adjusted several tax thresholds:

• The 17.5% rate now applies up to $48,000 (previously $53,500 — but the band was restructured)
• The 30% rate now applies from $48,001 to $70,000 (previously $53,501 to $70,000)
• The 33% rate threshold remained at $70,001

The practical effect for most earners was a modest reduction in tax — approximately $400–$1,500 per year depending on income level.

There are legitimate ways to reduce the amount of personal income tax you pay:

Structure business income through a company. Company profits are taxed at 28%, not your personal rate. If your personal rate is 33% or 39%, this is a meaningful saving.

Use a look-through company (LTC) for losses. If your business or investment property is making losses, an LTC lets those losses flow through to reduce your personal taxable income.

Claim all legitimate deductions. Self-employed people can deduct business expenses, home office costs, vehicle expenses, and more. Every dollar of deduction saves you tax at your marginal rate.

Review your ACC levy classification. Self-employed people are often over-classified into higher-risk levy categories. A review can reduce your ACC bill significantly.

Time your income. If you have flexibility over when you receive income (e.g. invoicing at year end), timing can shift income between tax years and potentially into a lower bracket.

Contribute to KiwiSaver. Voluntary contributions reduce taxable income and attract government contributions.

Understanding your tax rate is the starting point — but the real value comes from structuring your affairs to minimise the tax you pay within the rules. For most business owners and professionals, working with an accountant who proactively reviews your structure and income mix pays for itself many times over.

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Eastmure & Associates provides personal tax advice, returns, and proactive tax planning for individuals, business owners, and medical professionals across Christchurch, Canterbury, Selwyn, and Waimakariri.