Income Tax Rates & Rebates

How much is income tax in New Zealand?

It has become common practice in recent years for the rate of income tax to be adjusted annually in the July budget.

There are three tax rates in New Zealand, which are currently as follows:

Taxable Income ($)

Tax Rate (%)

Cumulative Tax ($)







over 60,000



Under recent tax changes, if you receive a lump sum payment (e.g. bonuses, back pay or retirement) and your annual income is over $60,000, you can elect to pay the higher tax rate of 39 per cent on the lump sum and therefore avoid ‘squaring up’ your tax at the end of the year. If you receive a redundancy payment which together with the annual value of your income for the previous four weeks is less than $38,000, you will pay a flat rate of 21 per cent tax on the redundancy payment.


Before you're liable for income tax, you can deduct certain allowances (known as rebates) from your gross salary, which reduce your tax bill. Some income rebates, such as the low earner rebate, are built into the PAYE rates but others, such as the housekeeper, childcare and donations rebates, must be claimed from the IRD on separate forms. Key rebates include:

Tax rebates must be claimed by 30th September following the end of the relevant tax year. Expenses associated with employment (such as clothing or travel to work) cannot usually be claimed as a tax allowance in New Zealand. However, the self-employed can claim legitimate business expenses. Interest on a mortgage cannot be claimed as a tax allowance in New Zealand. © 2003-2020 Just Landed