Taxes and Tax Schemes in New Zealand | What You Need to Know in 2025

New Zealand, a Pacific island nation known for its stunning landscapes, high quality of life, and strong economy, operates a comprehensive tax system that affects both residents and non-residents. Located in the southwestern Pacific Ocean, New Zealand combines a robust economy with a high standard of living, making it an attractive destination for international professionals and businesses.

New Zealand's economy, driven by sectors like agriculture, tourism, and technology, has shown resilience despite global economic challenges. The country's tax system is designed to support social welfare while maintaining competitiveness in the global market. Recent reforms have focused on simplifying tax procedures and enhancing digital tax filing for foreign residents.

The expat community in New Zealand is significant, with many professionals drawn to sectors like agriculture, technology, and education. The tax system, while detailed, offers various benefits and deductions that can significantly impact an expat's financial planning.

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New Zealand Income Tax

New Zealand employs a progressive income tax system with rates ranging from 10.5% to 39%. Resident taxpayers are subject to taxation on their worldwide income, while non-residents are taxed only on New Zealand-sourced income. The system includes the Accident Compensation Corporation (ACC) levy, which funds the country's no-fault accident compensation scheme.

Tax residents face the following income tax brackets (as of 2025):

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Additionally, the ACC levy is generally calculated at around 1.39% of gross income, bringing the effective maximum tax rate to approximately 40.39%.

If you want to have a better understanding of the taxes you should pay on personal income in New Zealand, you can use the personal tax calculator in the Taxation section of the New Zealand page.‍

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New Zealand Tax on Overseas Income‍

New Zealand's treatment of foreign income depends on residency status. The country recognizes two main categories of taxpayers:

1. Residents: Taxed on worldwide income
2. Non-residents: Taxed only on New Zealand-sourced income

This system particularly benefits non-residents, who are only taxed on income earned within New Zealand. However, residents must declare and pay taxes on their worldwide income, with potential relief through double taxation treaties.‍

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New Zealand Tax on Investments‍

Investment income in New Zealand receives specific tax treatment. Dividends and capital gains from listed stocks are typically taxed at the individual's marginal tax rate. The system includes:

• Dividends: Taxed at the individual's marginal tax rate, with imputation credits available for taxes paid by the company
• Capital Gains: Generally not taxed unless the gain is from the sale of property or shares acquired for the purpose of resale
• Interest Income: Taxed at the individual's marginal tax rate
• Rental Income: Taxed at the individual's marginal tax rate, with deductions for expenses

Real estate investments face both federal and local taxes, with potential deductions for depreciation, maintenance, and other expenses.‍

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New Zealand Corporate Taxation‍

Corporate tax in New Zealand is straightforward and competitive:

• Corporate Tax Rate: 28%
• Goods and Services Tax (GST): 15% standard rate, with no reduced rates
• Withholding Tax: Applicable to certain dividends, interest, and royalties paid to non-residents

The effective corporate tax rate typically ranges from 28% to 30%, depending on the company's location. Small and medium-sized enterprises may qualify for certain tax reliefs and incentives.

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‍Special Tax Regimes‍

New Zealand offers several special tax arrangements beneficial to international professionals and businesses:

1. Research and Development (R&D) Tax Incentive: Tax credits for companies engaged in R&D activities.
2. Foreign Income Tax Relief: Available to prevent double taxation on overseas income for residents.
3. Special Tax Benefits for Key Workers: Tax incentives for qualified foreign professionals working in New Zealand companies.
4. Investment Allowances: Deductions for investments in certain regions or sectors.

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Regional Comparison

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Tax Planning for New Zealand‍

Effective tax planning in New Zealand requires attention to several key areas:

1. Residency Status Management: Strategic planning of residency status can optimize tax treatment of foreign income.
2. Investment Strategy: Utilizing tax-advantaged accounts and long-term holding periods can optimize investment income.
3. Documentation: Maintaining clear records of overseas assets and income sources is crucial.
4. Professional Advice: Engaging with tax professionals to navigate the complexities of the New Zealand tax system.

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