Four tax changes to consider before 31 March 2025

Get your head around New Zealand’s recent and upcoming tax changes, and make sure you’re up-to-date with tax obligations and payroll processes before filing your EOFY returns.

Change #1: Income tax thresholds

Effective from 31 July 2024, personal income tax thresholds changed. New composite rates to account for this change applied for the income year to 31 March 2025.

• 10.5% : Applies up to $15,600 (previously $14,000).

• 17.5% : Applies from $15,601 to $53,500 (previously up to $48,000).

• 30% : Applies from $53,501 to $78,100 (previously up to $70,000).

It’s a good idea to double check that your payroll systems have reflected this to ensure there are no surprises for your employees in terms of incorrect PAYE deducted. Note the new marginal tax rates from 1 April 2025 are:

• 10.5% : Applies up to $15,600 (previously $14,000)

• 17.5% : Applies from $15,601 to $53,500 (previously up to $48,000)

• 30% : Applies from $53,501 to $78,100 (previously up to $70,000)

• 33% : Applies from $78,801 to $180,000 (previously up to $180,000)

• 39% : Applies to $180,001 and over (previously $180,001 and over)

Make sure your payroll systems reflect the new thresholds.

Change #2: Fringe Benefit Tax (FBT)

With the changes to income tax thresholds, FBT rates are also being updated, with adjustments taking effect from 1 April 2025. If you provide benefits like vehicles or loans to employees, review your FBT reporting processes and ensure you’re set up to account for the changes.

Change #3: Resident Withholding Tax (RWT)

RWT rates were also adjusted in line with the new personal tax thresholds as of 31 July 2024. If your business handles interest payments or other transactions requiring withholding tax, check that you are using the correct rates.

Change #4: Independent Earner Tax Credit (IETC)

If you’re a sole trader earning between $24,000 and $70,000, you may qualify for the IETC, which could lower your overall tax liability. Check your eligibility before filing your tax return.

Have questions about how these changes impact your business? Get in touch — we’ll guide you through it