Are we Paying Less or More Income Tax than 10 Years Ago?

Income tax is something we have to pay, and like Benjamin Franklin said, only two things are certain in life, taxes and death. We pay income tax on every dollar we earn and it comprises a part of every minute we work. Unfortunately, when it comes to New Zealand income tax rates, we only get a say every 4 years when we vote and even then our choices are made for us. So how do we fare compared to ten years ago?

The New Zealand income tax rate is in a constant state of change as the Government of the day responds to different financial climates and policy changes. These changes have occurred gradually and in different forms. In the late 1990’s and early 2000’s, income tax rates increased steadily, right through until as late as 2008. Through this dark time for the New Zealand taxpayer, the top tax rate was as high as 39% on the top tax bracket. Through this time the average tax rate for PAYE also rose from around 20% to a peak of 24.5% in 2008.

After 2008, the average income tax rate dropped through a series of changes, bottoming out at around 19% in 2011. It is worth noting however this is the average and some tax brackets, especially the bottom tax bracket income tax rate, have increased in the last few years. Many would argue however, that these drops were directly offset with a rise in GST to the current rate of 15%.

There was a continuous rise in the average income tax rate through the late 90’s and 2000’s followed by a series of steep drops post 2008:

One other large factor that has perhaps had a larger influence on New Zealanders than changes in the income tax rate is the appearance of tax refund services such as These services have not reduced the New Zealand income tax rate per se (although it would be pretty cool if they could), instead they have helped return millions of dollars of otherwise unclaimed overpaid tax to New Zealanders. Not a direct reduction in the income tax rate, but I’m sure you will agree that the effect is the same.

So are we paying more or less income tax than ten years ago? Well for most of us, the answer is clearly less, especially if you have applied for your tax refund.

This article was written by Tom Taylor for


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