Income tax on the 2025-26 brackets.
Income tax
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After-tax income
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Effective rate
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Worked example
Take someone earning a taxable income of $70,000 for the 2025-26 year. New Zealand has no tax-free threshold, so the very first dollar is taxed at 10.5 percent. The income is sliced across the bands and each slice is taxed at its own rate, then the parts are added together. The first $15,600 is taxed at 10.5 percent, which is $1,638. The next slice from $15,600 up to $53,500 is $37,900, taxed at 17.5 percent, which is $6,633. The remaining $16,500 from $53,500 up to $70,000 sits in the 30 percent band, which is $4,950. Adding those three parts gives total income tax of $13,221.
That leaves an after-tax income of $56,780. The top rate touched here is the 30 percent band, so the marginal rate is 30 percent, but the effective rate (tax divided by income) is only 18.89 percent because the lower bands pull the average down. The ACC earners levy is charged separately on wages and is not included in this income tax figure.
| Band | Amount in band | Tax |
|---|---|---|
| 10.5 percent (to $15,600) | $15,600 | $1,638 |
| 17.5 percent ($15,600 to $53,500) | $37,900 | $6,633 |
| 30 percent ($53,500 to $70,000) | $16,500 | $4,950 |
| Total | $70,000 | $13,221 |
How it is calculated
New Zealand uses a progressive marginal system with five bands: 10.5 percent up to $15,600, 17.5 percent to $53,500, 30 percent to $78,100, 33 percent to $180,000, and 39 percent above that. Each band only taxes the income that falls inside it, so a pay rise never reduces your take-home pay. There is no tax-free threshold, which is why low incomes still pay some tax from the first dollar. Your marginal rate is the rate on your last dollar earned, while your effective rate is the total tax divided by total income, and the effective rate is always lower than the marginal rate once you cross into a higher band. This tool computes PAYE on its own. On real wages an employer also withholds the ACC earners levy, and possibly KiwiSaver and student loan, which the take-home pay tool layers on top.