Written by our accounting partner Andrew Palmer, from Eden Palmer Prewett Ltd
In New Zealand, employees are required to pay income tax on their salary, which is deducted by their employer before their salary is paid to them. The amount of tax deducted depends on the employee’s income, with higher earners paying a higher percentage of their income as tax.
The current income tax rates in New Zealand for individuals are as follows:
| Up to $14,000 | 10.5% |
| $14,001 to $48,000 | 17.5% |
| $48,001 to $70,000 | 30% |
| $70,001 to $180,000 | 33% |
| Over $180,000: | 39% |
In addition to income tax, employees may also have other deductions taken out of their salary, such as:
- KiwiSaver: A voluntary retirement savings scheme that employees can opt into, with contributions made by both the employee and their employer. The standard amount of this is 3%
- Student Loan repayments: If an employee has a student loan, a portion of their salary may be deducted to repay the loan. This is 12.5%,but only if you have studied in NZ and have a NZ Student Loan.
- ACC: The Accident Compensation Corporation provides support for people who are injured in accidents. Employees pay an ACC levy, which is deducted from their salary. This will be 1.53% for the 2023/24 tax year, to a maximum of $2,132.57.
Employers are also required to pay contributions towards certain government schemes, such as KiwiSaver and ACC, on behalf of their employees. This does not form part of the gross salary you earm.
Unfortunately, in New Zealand there are very few expenses that can be claimed against your salary as a deduction. Really, the only two are income protection premiums (though chat to us first) and accounting fees for tax return preparation.
If you would like to know what your take home pay will be, a great calculator that will work all of the above out for you is https://www.paye.net.nz/calculator/
If you would like any further information on employee tax deductions in New Zealand, please reach out to Andrew Palmer on or +64 9 636 333
Andrew Palmer | Partner
www.eppl.co.nz
