The minimum family tax credit for poorer families will be increased from next April to make up for the GST increase and inflation.
Revenue Minister Peter Dunne said the minimum family tax credit provided a guaranteed minimum family income to families who were in work and helped support them in moving off a benefit and into paid employment.
"It ensures that these working families are better off as a result of being in the workforce," Mr Dunne said.
The credit currently guarantees recipients an after-tax income of $21,008 a year following an adjustment made in this year's budget.
This will rise to $22,204 from 1 April 2011. The change to the minimum family tax credit was approved by Order in Council yesterday.