In a move aimed at providing tax relief for individuals and families, New Zealand has unveiled significant updates to its tax brackets 2024 as part of the Government Budget, announced on 30th May.

These changes, effective from 31st July 2024, (along with a wider range of tax changes for NZ) encompass increased income thresholds, enhancements to tax credits, and adjustments in family support measures. Here’s a breakdown of what this means for you:

• Individual Tax Rates NZ 2024
• Enhancements to Tax Credits
• Implications for Taxpayers and Employers
• Other Considerations
• Changes in Family Support Measures
• Tax Changes NZ – For Employers

Updated Personal Income Tax Thresholds

The revised tax brackets are structured to better align with current economic realities and inflationary pressures:

Tax Rates NZ 2024

• $0-$15,600 Taxed at 10.5%
• $15,601-$53,500 Taxed at 17.5%
• $53,501-$78,100 Taxed at 30%
• $78,101-$180,000 Taxed at 33%
• Above $180,000 Taxed at 39%

These adjustments to the tax brackets aim to ease the tax burden on lower to middle-income earners while ensuring higher earners contribute proportionately more.

Enhancements to Tax Credits

Effective from the same date, changes to independent earner tax credits and family tax credits are also set to benefit eligible individuals:

Independent Earner Tax Credit:

Thresholds increase to $66,000 annually, with eligible individuals receiving up to $10 per week or $520 annually.

In-Work Tax Credit:

The base rate rises to $97 per week, aimed at supporting individuals and families actively engaged in employment.

Tax Changes NZ – Implications for Taxpayers and Employers

For taxpayers, these new tax rates mean potential changes in take-home pay and tax liabilities.

Employers are encouraged to update payroll systems promptly to reflect the new tax rates. If adjustments aren’t made by 31st July, any owed amounts will be settled during the annual reconciliation process.

Other Considerations

Secondary Tax Codes:

Those using secondary tax codes should review their income thresholds to ensure compliance with the updated rates.

Resident Withholding Tax (RWT):

Investors need to verify their RWT rates post-31st July to ensure accuracy.

Provisional Tax:

Taxpayers paying provisional tax should consult with their tax agents to discuss potential adjustments.

Tailored Tax Codes:

Those using tailored tax codes will receive recalculated certificates to reflect the new thresholds.

Changes in Family Support Measures

Effective from 31st July 2024:

Minimum Family Tax Credit (MFTC):

Eligibility thresholds increase, ensuring targeted support for families.

In-Work Tax Credit (IWTC):

Enhanced base rates provide additional financial assistance to working families.

Paid Parental Leave (PPL):

Updated tax thresholds will automatically adjust entitlements for paid parental leave recipients.

Tax Changes NZ – For Employers

Employers using payroll software will receive updates from their providers to ensure compliance with the new tax specifications.

Manual filers must incorporate the revised tax tables into their calculations to remain compliant with the updated rates.

NZ Tax Changes – In Conclusion

The adjustments to New Zealand’s tax brackets and credits under the 2024 Budget aim to create a fairer and more supportive fiscal environment for individuals and families.

By understanding these changes and taking proactive steps to adjust financial strategies where necessary, taxpayers can navigate the evolving tax landscape with confidence and ensure their financial plans remain robust and aligned with regulatory requirements.

Stay informed, stay prepared, and leverage these updates to optimise your financial position in New Zealand. You may also like to read our article on the wider range of important tax changes that are coming to NZ in 2024.

If you’d like further professional advice on any of the above matters, please contact us.