What will your tax cut be and when will it arrive?

Workers will get their first tax cuts in 14 years after the Government changes the thresholds for income tax today.

All the income tax bands have been lifted, other than for income of more than $180,000, which will continue to be taxed at 39%

The increases mean you keep more of your income because your money is being taxed at a lower rate than it was before.

For example, currently, the first $14,000 you earn is taxed at 10.5%.

Now the changes have kicked in, the first $15,600 you earn will be taxed at 10.5%

How much money you will get back from the tax cuts depends on how much you earn.

For example, a single person with no children who works full-time on minimum wage will now get an extra $12.52 a week.

On the other hand, a single person with no children who earns $150,000 a year will now get an extra $20.05 a week.

Try our calculator to see how much you may save:

Personal income tax thresholds aren’t the only forms of income changing on July 31.

Other changes include the extension of the independent earner tax credit (IETC) and an increase to the in-work tax credit and the minimum family tax credit.

Several factors impact how much you are taxed, including receiving a benefit or student allowance, having a partner or children and receiving NZ Superannuation.

The FamilyBoost credit is a separate system from the tax cuts, through which families can apply for reimbursement for the costs of early childhood education (ECE).

Parents and caregivers must submit ECE invoices every three months, starting from July 1, which can be done online via myIR, with FamilyBoost refunded as a lump sum.

When will I get my income tax cut?

New Zealanders do not need to do anything to receive their tax cut. It will be automatically calculated and adjusted in their pay.

The original date for the changes was pushed back from July 1 to allow more time for payroll providers to update and test systems.

When you start to see the impacts of the income tax cuts depends on your employer’s pay cycle.

It will take a week or two to see all the changes in your payslip. For example, you may have one week of work taxed at the old rate and one week of work taxed at the new rate in one of your payslips.

Chris Knox is data editor and head of data journalism at the New Zealand Herald.

Jaime Lyth is a multimedia journalist for the New Zealand Herald, focusing on crime and breaking news. Lyth began working under the NZ Herald masthead in 2021 as a reporter for the Northern Advocate in Whangārei.