Tax Changes in New Zealand from 1 April 2025: What You Need to Know

1. Simplified Fringe Benefit Tax (FBT) and ESCT Thresholds

From 1 April 2025, the IRD will align the thresholds used for calculating Fringe Benefit Tax (FBT), Employer Superannuation Contribution Tax (ESCT), and Portfolio Investment Entity (PIE) rates. This change follows income tax adjustments made in July 2024, aiming to simplify tax reporting and reduce admin costs for employers.

2. ESCT Rate Changes: One Rate for All

The ESCT applied to employer KiwiSaver contributions will move to a flat 30% rate from 1 April 2025. Previously, rates varied from 10.5% to 39% based on the employee's income. This unified approach will boost retirement savings, especially for higher-income earners who were previously taxed at 33% or more.

3. ACC Levy Adjustments

The ACC Earners’ Levy rate will increase slightly from 1.60% to 1.67%, with the maximum earnings threshold rising from $142,283 to $152,790. This means high-income earners may see slightly higher ACC deductions, although coverage remains the same.

4. Increases in Welfare and NZ Super Payments

In line with annual indexation, most benefit payments and the New Zealand Superannuation (NZ Super) will rise. From April 1, 2025:

Single (living alone): $1,076.84 per fortnight
Married/partnered: $828.34 per person, per fortnight

This increase reflects cost-of-living pressures and ensures retirees maintain purchasing power.

5. Minimum Wage Increase

New Zealand’s adult minimum wage will rise to $23.50/hour, up 1.5% from the previous year. The starting-out and training wages are adjusted to $18.80/hour. This change supports over 145,000 workers across the country and aligns with inflation targeting goals.

FAQ: Common Questions on April 2025 Tax Changes

Does the flat ESCT rate mean I’ll save more in KiwiSaver? – Yes, especially if you were previously taxed above 30% on employer contributions.
Are benefit increases automatic? – Yes, payments are adjusted automatically by MSD according to inflation-linked formulas.
Will businesses need to update payroll systems? – Absolutely. Ensure your payroll software reflects the new ESCT and FBT thresholds by 1 April.

April 2025 marks another important moment for New Zealand’s tax landscape. Whether you’re an employee, self-employed, or running a business, understanding these changes can help you make smarter financial decisions and avoid surprises.

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Kiwi Money Matters is written and maintained by a New Zealand-based writer with hands-on experience in finance and accounting since 2015.

All posts are personally researched, written to ensure clarity and trustworthiness for everyday Kiwis.

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