New Zealand Tax Brackets 2026
You're paying less tax than you think. On $85,000, most people assume they're paying 33%. The actual number is 21.1%. That gap — between what you think you pay and what you actually pay — is how NZ's progressive tax system works. Every dollar is taxed at the rate for the bracket it falls in, not a single flat rate on everything. Here are the current brackets, what you actually keep at every income level, and why a pay rise never makes you worse off.
New Zealand has five PAYE income tax brackets for the 2025-26 tax year, updated in July 2024 (IRD).
Current NZ income tax rates (2025-26)
These rates apply for the tax year 1 April 2025 to 31 March 2026 (IRD).
| Income bracket | Tax rate |
|---|---|
| $0 to $15,600 | 10.5% |
| $15,601 to $53,500 | 17.5% |
| $53,501 to $78,100 | 30% |
| $78,101 to $180,000 | 33% |
| $180,001 and above | 39% |
The 39% rate was introduced on 1 April 2021 for income above $180,000. The lower four thresholds were raised on 31 July 2024 (IRD).
How progressive tax actually works
NZ uses a progressive tax system. That means each dollar you earn is taxed at the rate for the bracket it falls in, not a single flat rate on your whole income. This is one of the most common misunderstandings in personal finance.
Say you earn $85,000. You don't pay 33% on the full amount. Instead, your first $15,600 is taxed at 10.5%, the next $37,900 at 17.5%, the next $24,600 at 30%, and only the final $6,900 (the amount above $78,100) is taxed at 33%. Your total PAYE comes to $17,928, which is an effective tax rate of 21.1%, well below the 33% marginal tax rate on your top dollar (IRD).
This is why a pay rise never makes you worse off. Moving into a higher bracket only affects the income above that threshold, not everything below it.
The Forge Money Effective Rate Card: what you actually pay at every income level
All figures are for the 2025-26 tax year. Weekly take-home is gross pay minus PAYE only (before ACC levy and KiwiSaver) (IRD).
| Annual income | Total PAYE | Effective rate | Weekly take-home |
|---|---|---|---|
| $30,000 | $4,158 | 13.9% | $497 |
| $50,000 | $7,658 | 15.3% | $814 |
| $65,000 | $11,721 | 18.0% | $1,025 |
| $78,100 | $15,651 | 20.0% | $1,201 |
| $85,000 | $17,928 | 21.1% | $1,290 |
| $100,000 | $22,878 | 22.9% | $1,483 |
| $120,000 | $29,478 | 24.6% | $1,740 |
| $150,000 | $39,378 | 26.3% | $2,127 |
| $180,000 | $49,278 | 27.4% | $2,514 |
| $200,000 | $57,078 | 28.5% | $2,749 |
| $250,000 | $76,578 | 30.6% | $3,335 |
Notice how the effective rate climbs gradually. Even at $250,000, your effective rate is 30.6%, not the 39% top marginal rate. The progressive system means you always keep most of what you earn.
On $85,000, your effective rate is 21.1% and your weekly take-home is $1,290 before ACC and KiwiSaver. See your exact number with all deductions →
How the 2024 tax bracket changes affected your pay
On 31 July 2024, the government raised the income thresholds for the bottom four tax brackets. The rates stayed the same, but more of your income is now taxed at lower rates (IRD).
| Income bracket | Old threshold (pre-July 2024) | New threshold (current) |
|---|---|---|
| 10.5% | $0 to $14,000 | $0 to $15,600 |
| 17.5% | $14,001 to $48,000 | $15,601 to $53,500 |
| 30% | $48,001 to $70,000 | $53,501 to $78,100 |
| 33% | $70,001 to $180,000 | $78,101 to $180,000 |
| 39% | $180,001+ | $180,001+ (unchanged) |
The maximum annual saving from these changes is $1,043. Here's what it looks like at different income levels (IRD):
| Annual income | Old PAYE | New PAYE | Annual saving | Weekly saving |
|---|---|---|---|---|
| $50,000 | $8,020 | $7,658 | $362 | $6.96 |
| $65,000 | $12,520 | $11,721 | $800 | $15.38 |
| $85,000 | $18,970 | $17,928 | $1,043 | $20.05 |
| $100,000 | $23,920 | $22,878 | $1,043 | $20.05 |
| $150,000 | $40,420 | $39,378 | $1,043 | $20.05 |
Everyone earning $78,100 or more gets the full $1,043 saving. Below that, the saving scales down. Someone on $30,000 saves about $112 per year.
Other taxes and deductions beyond PAYE
PAYE is the biggest deduction from your pay, but it's not the only one. Three other deductions commonly affect your take-home pay:
ACC earner's levy. You pay the earner's levy on your gross income (currently 1.67% for 2025-26, up to $152,790). On a salary of $85,000, that's $1,420 per year. Your employer deducts it automatically alongside PAYE. The rate changes annually — see ACC levy explained for current rates.
KiwiSaver contributions. If you're enrolled in KiwiSaver, you contribute 3%, 4%, 6%, 8%, or 10% of your gross pay. The default rate is 3% (rising to 3.5% from 1 April 2026 and 4% from 1 April 2028). On $85,000, that's $3,400 per year at 4%, or $8,500 at 10% (IRD).
Student loan repayments. If you have a student loan and earn above $22,828 per year, you repay 12% of every dollar above that threshold. On $85,000, your annual repayment is $7,461 (IRD).
For a full breakdown including all deductions, use the PAYE calculator. You can also read more about ACC levies, KiwiSaver contribution rates, and student loan repayments.
Common questions
How much tax do I pay on $85,000 in New Zealand?
On an annual salary of $85,000, you pay $17,928 in PAYE income tax for the 2025-26 tax year. Your effective tax rate is 21.1%. After PAYE alone, your weekly take-home is $1,290. With ACC levy ($1,420) and KiwiSaver at 4% ($3,400) deducted as well, your net take-home drops to about $62,252 per year or $1,197 per week (IRD). Note: KiwiSaver at 4% is the rate from 1 April 2028; the current minimum may be 3% or 3.5% depending on when you're reading this.
What is my effective tax rate?
Your effective tax rate is your total PAYE divided by your total income, expressed as a percentage. It's always lower than your marginal rate because of the progressive bracket system. For example, on $100,000 you pay $22,878 in PAYE, giving an effective rate of 22.9%, even though your top marginal rate is 33% (IRD).
When did NZ tax brackets last change?
The most recent change was 31 July 2024, when the income thresholds for the bottom four brackets were raised. The 10.5% bracket moved from $14,000 to $15,600, the 17.5% bracket from $48,000 to $53,500, the 30% bracket from $70,000 to $78,100, and the 33% bracket from $180,000 stayed the same. The rates themselves did not change (IRD).
Do I pay the higher rate on my whole income?
No. NZ uses a progressive tax system. You only pay the higher rate on the portion of your income that falls within that bracket. If you earn $85,000, only $6,900 (the amount above $78,100) is taxed at 33%. The rest is taxed at lower rates. This is why your effective tax rate (21.1% on $85,000) is always lower than your marginal rate (33%) (IRD).
What is the top tax rate in NZ?
The top personal income tax rate in New Zealand is 39%, which applies to income above $180,000. It was introduced on 1 April 2021. On a salary of $200,000, only $20,000 is taxed at 39%. The rest is taxed at the lower bracket rates, giving an effective rate of 28.5% (IRD).
How does NZ income tax compare to Australia?
NZ's top rate of 39% is lower than Australia's top rate of 45% (which kicks in at A$190,000). NZ's entry rate of 10.5% is also lower than Australia's 16% (from 1 July 2024). However, Australia has a tax-free threshold of A$18,200, meaning the first A$18,200 of income is untaxed. NZ has no tax-free threshold. The overall tax burden depends on your income level and which country you're a tax resident in (IRD, ATO).
What is the Independent Earner Tax Credit?
The Independent Earner Tax Credit (IETC) is a $520 per year credit for people earning between $24,000 and $48,000 who don't receive a government benefit, NZ Super, or Working for Families. It reduces your tax by $10 per week. The credit starts to abate once your income exceeds $44,000 and phases out completely at $48,000. You claim it through your tax code (IRD).
What to do next
- PAYE calculator: Get your exact take-home pay after PAYE, ACC, and KiwiSaver
- KiwiSaver contribution rates: See how changing your rate affects your pay and retirement savings
- ACC levy explained: What the ACC earner's levy is and how it's calculated
- Student loan repayment guide: How repayments work and what you actually pay
Last updated: 28 February 2026. Source: IRD (ird.govt.nz). Tax rates are for the 2025-26 tax year (1 April 2025 to 31 March 2026). This is financial information, not financial advice.
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This is educational content, not financial advice.