Categories: General Marginal Tax - What will it be? In New Zealand, a marginal tax rate system is used to tax an individual’s income, i.e. the tax rate increases as one’s income increases. As at today, the marginal tax rates are as follows: Taxable income bracket Applicable tax rate $0 to $14,000 10.5% $14,001 to $48,000 17.5% $48,001 to $70,000 30% $70,001 to $180,000 33% > $180,000 39% The first three thresholds have not changed since 1 October 2010, while the current top tax rate of 39% has applied from the 2021 / 2022. With the rate of wage inflation being a hot topic at the moment, and a general election due later this year, we adjusted the marginal tax rates for inflation since October 2010 to see what they would look like – particularly given this is an election promise that might be made. The marginal tax thresholds would look something along the lines of: Taxable income bracket Applicable tax rate $0 to $21,000 10.5% $21,001 to $72,000 17.5% $72,001 to $105,000 30% $105,001 to $270,000 33% > $270,000 39% With the average salary in New Zealand being around $62,000. Under the current marginal tax rates, this results in $11,620 of income tax payable. However, applying the adjusted rates above, $9,380 would be payable – a difference of over $2,000. For someone on a $100,000 salary, the difference in annual tax payable between the thresholds is almost $4,400 a year. How much less tax would you be paying? If you would like to discuss this further, please feel free to contact our team here. Preparing for the end of the Financial Year Pacific Business Village Launch Print