NZ TAX RATES

NZ tax rates reshaped the top end of the personal and trustee tax landscape between 2021 and 2025, and several other property-relevant rules changed alongside them. It’s easy to lose track of exactly what changed, when, and what’s still current. This guide sets out where every rate and threshold stands today — personal, trustee, company. It also covers the interest deductibility and bright-line changes that landed in the same period.

30-Second Read

• A 39% personal tax rate(opens in new tab) has applied since 1 April 2021 on income over $180,000. It’s an individual threshold, not a household one, and it only applies to the portion of income above $180,000.
• The trustee tax rate(opens in new tab) rose from 33% to 39% on 1 April 2024, aligning it with the top personal rate.
• Personal tax brackets below the 39% threshold were adjusted on 31 July 2024. No further changes have been made since, including through Budget 2026.
• Company tax stays at 28%. The gap between company, trust and top personal rates is where structure planning matters most.
• Two related property rules changed in the same window: interest deductibility on residential rental property returned to 100% from 1 April 2025, and the bright-line test dropped to 2 years from 1 July 2024.

Personal Income Tax Rates

A 39% personal tax rate has applied since 1 April 2021 on personal income exceeding $180,000 a year. A few things trip people up about this rate:

• It applies to individuals only. Someone earning a $200,000 salary pays an extra $1,200 a year — 6 cents in the dollar extra, on the $20,000 above the threshold.
• It doesn’t apply to combined household income. If you and a partner each earn $100,000, neither of you pays any more tax as a result. New Zealand’s personal tax system doesn’t aggregate spousal or partner income.
• It’s progressive, not a blanket rate. Income under $180,000 gets taxed at the lower rates below, scaling from 10.5% up to 33%. Only income above $180,000 gets taxed at 39%.

Current Personal Tax Brackets

The personal income tax brackets were adjusted on 31 July 2024, and these remain the current settings, unchanged through Budget 2026:

• 10.5% up to $15,600
• 17.5% on $15,601 to $53,500
• 30% on $53,501 to $78,100
• 33% on $78,101 to $180,000
• 39% on $180,001+

If you’re an employee, these brackets set your PAYE deductions. If you’re self-employed, or earn income that isn’t taxed at source, they underpin your provisional and terminal tax calculations too.

Some Worked Examples

So how do these changes to NZ tax rates work in practice? Let’s look at some examples:

Say you earn $220,000 in salary. (That’d be nice!) You don’t pay 39% on the whole amount — only on the $40,000 sitting above the $180,000 threshold. The rest gets taxed progressively through the lower brackets, same as anyone else’s income up to that point. Crossing a threshold doesn’t jump your entire income to the higher rate. In a progressive system, it never does.

Say you earn $100,000 in salary. Here’s how your tax breaks down across the brackets, rather than a flat rate on the whole amount:

• 10.5% on the first $15,600 = $1,638
• 17.5% on the next $37,900 (from $15,601 to $53,500) = $6,632.50
• 30% on the next $24,600 (from $53,501 to $78,100) = $7,380
• 33% on the remaining $21,900 (from $78,101 to $100,000) = $7,227

Total tax: $22,877.50 — an effective rate of about 22.9%, even though your top marginal rate is 33%. You never touch the 39% bracket at all, since that only kicks in above $180,000. This is the same progressive logic as the $220,000 example above — each bracket only taxes the slice of income that falls inside it, not everything you earn.

Why Trustees Felt the Hit

Before 1 April 2024, trustees paid a flat 33% on trust income — actually lower than the top personal rate of 39%. That gap arguably created an incentive to route income through a trust rather than earn it personally. Aligning the trustee rate with the top personal rate closed it. If your trust was set up partly around that old rate differential, it may be worth revisiting. That’s especially true if the original reasoning no longer holds.

Company Tax Rate

Company tax has sat at 28% throughout this period, and Budget 2026 made no change to it. That flat rate sits well below the 39% top personal and trustee rate. It’s exactly why structure planning matters so much once your income climbs.

Other Property-Relevant Changes From the Same Period

Two further rules shifted alongside the NZ tax rates changes above, and both matter directly if you hold residential rental property.

Interest deductibility on residential rental property was phased back in: 80% from 1 April 2024, and 100% from 1 April 2025(opens in new tab) onward. That full deductibility now applies to every landlord, regardless of when they bought their property or drew down their lending.

The bright-line test dropped from a 10-year period to a 2-year period(opens in new tab), for any property sold on or after 1 July 2024. That applies regardless of the original purchase date. Budget 2026 confirmed no further change to this setting.

The Importance of Structures

These settings show why the right business or investment structure matters. There’s ongoing planning interest in the gap between the trust tax rate (39%), the company tax rate (28%), and the top personal tax rate (39%). The right structure, though, always depends on your own circumstances and plans.

A few situations where this gap tends to matter in practice:

• Retained earnings. A company pays only 28% on profits it retains, versus the 39% a trust or high-earning individual pays on the same income. Tax still applies eventually, once profits get distributed as dividends, subject to imputation credits.
• Timing of distributions. Trustees have some flexibility over when — and to whom — trust income gets distributed. That matters where beneficiaries sit on lower personal tax rates than the trustee rate.
• Reviewing older structures. A structure set up years ago around a different rate environment may no longer serve its original purpose — say, one built when the trustee rate sat at 33%, below the top personal rate. See this article if you’re weighing up structure for an investment property specifically.

None of this has a one-size-fits-all answer. The best structure depends on your income levels and how that income gets earned. Your longer-term plans for the funds involved matter too.

Quick Reference

Summary

NZ tax rates have settled into a stable pattern since the last round of changes took full effect: 39% at the top for both individuals and trustees, 28% for companies, and unchanged personal brackets through Budget 2026. Full interest deductibility and the shorter 2-year bright-line test now apply to every residential property investor, layered alongside those rate changes. None of these settings has moved further since. The gap between company, trust and top personal rates still makes structure a live question worth revisiting, especially if your structure was set up under the old rate environment.

Talk to EpsomTax.com About Your Tax Position

If you’d like a review of your tax position and structure against the current settings, contact us or call us on 09 973 0706, line 2. Looking for info on provisional tax or tax due dates? See this article. Wondering about tax pooling? See here for more info. Worried about crypto tax? We can help with that too.