NZ Income Tax Calculator
Use our NZ Income Tax Calculator to estimate your effective effective tax rate based on the latest New Zealand income tax rates and brackets. Better plan your finances.
New Zealand Income Tax Rates
Income tax in New Zealand is a progressive tax levied on total worldwide income for residents, with some exceptions for certain types of foreign income. For non-residents, tax is generally only applied to New Zealand-sourced income.
There are 5 tax brackets as follows:
| Taxable base (from) | Taxable base (to) | Tax rate |
| 0 | 14,000 | 10.5% |
| 14,001 | 48,000 | 17.5% |
| 48,001 | 70,000 | 30% |
| 70,001 | 180,000 | 33% |
| 180,001 | Remaining | 39% |
In New Zealand, there is no tax-free allowance. Income is taxed from the first dollar earned.
New Zealand has a number of tax credits that can help reduce your overall tax liability. These include:
- Independent Earner Tax Credit (IETC) for those earning between NZ$24,000 and NZ$48,000 who don't receive certain types of income.
- Working for Families Tax Credits for families with children.
- Best Start tax credit for families with young children.
New Zealand doesn't have a specific marriage allowance, but couples with children may be eligible for Working for Families Tax Credits based on their combined income.
Note that New Zealand has an Accident Compensation Corporation (ACC) levy, which is separate from income tax. This levy funds New Zealand's no-fault accidental injury scheme and is calculated based on your income.
For self-employed individuals, there are provisions to claim business expenses against income, which can reduce the overall taxable income. However, these must be directly related to earning the income and properly documented.
Tax Law & Fines in the NZ
In New Zealand, the tax system is overseen by the Inland Revenue Department (IRD), which is responsible for administering various taxes, including income tax, goods and services tax (GST), and more.
The IRD manages filing deadlines, tax collection, audits, and penalties for non-compliance. Here is a summary of the tax penalties and fines in New Zealand:
- Filing a late tax return in New Zealand can result in a late filing penalty. The penalty is NZ$50 if your net income is below NZ$50,000, and NZ$250 if it's above. For companies, the late filing penalty is NZ$250, regardless of income.
- Late payment penalties are also applied. An initial 1% penalty is charged the day after the due date. If the tax remains unpaid, a further 4% penalty is charged at the end of the 6th day after the due date. Every month the tax remains unpaid, a further 1% penalty is added.
- Interest is also charged on unpaid tax, starting from the day after the original due date. The interest rate is set by the IRD and can change over time.
- For more serious cases of tax evasion or fraud, the Tax Administration Act 1994 provides for significant penalties. These can include:
- Shortfall penalties of up to 150% of the tax shortfall for evasion
- Criminal penalties including fines of up to NZ$50,000 and/or imprisonment for up to 5 years for knowingly failing to keep required documents or providing false information
New Zealand participates in international tax information-sharing agreements, including the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA). This enables automatic reporting to the IRD of income received from countries party to these agreements.
The IRD also has an Automatic Exchange of Information (AEOI) portal where financial institutions can report information about foreign tax residents with accounts in New Zealand.
It's important to note that tax laws can change, and penalties may be updated. Always check the latest information on the IRD website or consult with a qualified tax professional for the most current and accurate information.
Frequently Asked Questions
Got a question? We've got answers.
Progressive income tax uses graduated, increasing tax rates that apply to different income brackets. Here is a hypothetical example. Income tax in a random country is divided into brackets, like 0-$10k, $10k-40k, etc. Each bracket has a tax rate that increases as income rises. For example: 10% for 0-$10k and 15% for $10k-$40k and 25% for $40k-$85k. You calculate progressive income tax by applying the rate for each bracket only to the income in that bracket. So for $60k income, the progressive tax income will be 10% of first $10k and 15% of next $30k and 25% of remaining $20k. This will result in a total tax of $10,500.
Income tax is a tax levied on individuals and business entities based on their income or profits. It is imposed on taxable income, which is calculated as gross income minus any deductions and exemptions allowed under the tax code. For individuals, income tax typically applies to wages, salaries, tips, investment income like dividends and interest, business/self-employment income, capital gains, etc.
Social security contribution refers to the taxes paid into the social security system by employees, employers, and self-employed individuals. It’s used to fund several important social insurance programs such as retirement benefits, disability benefits, unemployment benefits, survivor benefits, medicare health insurance, etc.
Self-employed income refers to the earnings and revenues generated by individuals who are self-employed, operate their own business or have side projects. Some common examples of self-employed income include income from sales of products or services, consulting or freelance income, commissions, profit distributions, etc.
Self-employed expense refers to costs and expenditures incurred by individuals who are self-employed, owns their own business, or has a side project. Some common examples of self-employed expenses include equipment, supplies, insurance, professional fees, repairs and much more.
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