The flat kitty
Flatmates each put money into a shared kitty for power, internet and groceries. Nobody could run the whole house alone, but together the lights stay on for everyone.
Tax is the country’s kitty.
Moneymaker explains
Tax, made simple
Tax is how New Zealanders chip in together for the things none of us could pay for alone: hospitals, schools, roads and support when life gets hard.
Why we pay tax
Three ways to think about it
Tax works a lot like things you already know. Everyone puts a little in, and everyone gets a lot more back than they could buy on their own.
Club subs
Your sports club subs pay for the field, the gear, the lights and the coach. Players who earn more, like the adults, usually pay a bigger sub than the juniors.
People who earn more chip in a bigger share.
The potluck
At a potluck everyone brings a dish, and everyone gets a full plate, including the people who couldn’t bring much this time. Next time it might be you.
Tax looks after people when they need it.
How it works
Where tax comes from, and where it goes
The Government expects to spend about $155 billion in the 2026/27 year. Here’s the loop: people and businesses pay in, the Government pays for services, and those services come back to all of us.
Where the money goes, 2026/27
Core Crown expenses, total about $155 billion. “Finance costs” is interest on government debt. Source: Treasury, Budget 2026 at a Glance.
Where the money comes from, 2026/27
Core Crown revenue, about $146 billion. Spending is higher than revenue this year, and the gap is borrowed. Source: Treasury, Budget 2026 at a Glance.
Tax brackets
Think of buckets, not a cliff
Income tax fills up like a row of buckets. Your first $15,600 goes in the 10.5% bucket. Only the money that spills over goes into the next bucket at 17.5%, and so on. That means a pay rise never leaves you worse off: only the extra dollars are taxed at the higher rate.
Income tax rates for individuals from 31 July 2024, still current for 2026/27. Source: Inland Revenue.
Two ways people earn
Working for someone, or running your own business
Everyone pays tax on what they earn, but how it gets paid depends on how you earn it.
Employee
You work for someone else
Your employer does the hard part. Before your pay reaches your bank account, they take out tax and send it to Inland Revenue for you. That’s called PAYE: Pay As You Earn.
- Income tax using the bucket rates
- ACC earners’ levy, 1.75%, which pays for injury cover
- KiwiSaver, 3.5% by default, which is your savings, not tax
- Student loan, 12% of what you earn over $24,128
Business owner
You run your own business
Nobody takes tax out for you, so you set money aside and pay it yourself. As a sole trader, your profit is your personal income. With a company, the company pays 28% tax on its profit, then you pay personal tax on what it pays you.
- GST: if you sell more than $60,000 a year, you add 15% GST to prices and pass it on. It was never your money; you’re just holding it, like carrying a friend’s lunch money.
- Company tax: 28% of company profit.
- Imputation credits: dividends come with a “tax already paid” voucher for the 28%, so the same profit isn’t taxed twice.
- Provisional tax: pay as you go through the year once you owe more than $5,000 at year end.
Calculator
How much tax will I pay?
Choose how you earn, enter your numbers, and see your tax, your take-home pay, and what your tax helps pay for.
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Sales minus business costs, not counting GST.
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Uses 2026/27 rates for New Zealand tax residents: income tax from 10.5% to 39%, ACC earners’ levy 1.75% (up to $156,641), company tax 28%. It leaves out other credits, Working for Families, secondary jobs, and the ACC work levy that self-employed people pay on top, which depends on your industry.
Total tax and levies$0
Take-home a year$0
Average tax rate0%
Your income in the tax buckets
If your tax were shared out like the Government’s budget
Illustrative only: tax isn’t ring-fenced for each service. Shares are from 2026/27 core Crown expenses.
Your say
People see tax differently, and that’s OK
Most people agree we need tax to fund things we share. Where people disagree is on how much, who pays what, and what it should be spent on.
Some want lower taxesThey argue people should keep more of what they earn, and that lower taxes help businesses grow and create jobs.
Some want more spendingThey argue better-funded health, schools and support make everyone better off, and that people who earn more can afford to pay more.
Everyone gets a sayYou can vote, make a submission on the Budget or a law, or talk to your local MP. That’s how a country decides its kitty.