How your New Zealand income tax rate may change over time

The amount of income tax you pay depends on your income and whether you are entitled to any tax credits. This will undoubtedly change throughout your life, and thus so will your income tax rate.

IRD Number Before you begin any form of paid employment in New Zealand, you must have an IRD number by which the IRD will be able to identify you and which will never change. It is possible to work without one but your tax will be deducted at the ‘no notification rate,’ which is a far higher rate. You should give this number to your employer, bank (for tax deductions on interest payments), and accountant if you have one.

Tax code Whenever you start a new job or your income changes you need to fill out an IR330 with the right tax code or you could either be paying too much tax or find yourself with a tax bill at the end of the financial year. If you don’t complete an IR330 your employer will have no choice but to use the steep ‘no notification rate.’

Tax credits If you have made a donation to a donee organisation, are under 18 years old, have children, or even if you have been affected by extreme weather events, a range of tax credits are open to you so always check what you’re entitled to.

Tax rates As with all income tax systems from around the world, tax rates increase with wage increases. For every $1 earned, you will pay: • 10.5% for income up to $14,000 per year • 17.5% for income from $14,001 to $48,000 • 30% for income from $48,001 to $70,000 • 33% for income of $70,001 and over.

If either you don’t have an IRD number or you are on the ‘no notification rate’ you will be charged a whopping 45% whatever your income. Try using the IRD’s online PAYE calculator to help you to calculate your income tax rate and what that equates to in monetary terms.

Why your tax rate might change There are a number of reasons for why your income tax rate nz might change, which is why you should look at your tax code every time your circumstances alter. You may have a baby, in which case you are eligible for tax credits and your income may change. You might get made redundant and only work part of the year, or change jobs or receive a promotion which places you on a higher wage band for tax purposes.

Income tax rates in New Zealand are designed to reflect the stage at life you are in and the amount you earn but of course the rates themselves will change over time too. It’s advisable to keep abreast of these changes as well as your personal changes, and ensure you’re on the right tax code and that the relevant bodies know what that is.


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