Base Tax rates on income for New Zealand residents are currently as follows:
| tax | on annual earnings |
|---|---|
| 19.5% | up to $38,000 |
| 33.0% | between $38,000 and $60,000 |
| 39.0% | over $60,000 |
For example, a labourer earning $600 per week would earn $31,200 before taxes over the course of a year. Income taxes paid (through PAYE) would be 31200 * 0.195 = $6084, or $117 per week.
An IT specialist earning $100,000 per year would pay taxes as follows:
| 38000 * 0.195 | = | $7410 |
| (60000-38000) * 0.33 | = | $7260 |
| (100000-60000) * 0.39 | = | $15600 |
| $30270 |
For a total tax burden of $30,270 and an effective income tax rate of 30.3% on their salary.
Actual taxes deducted or owed throughout the year may differ if you earn other income through a second job, business or investments, if you partake in the kiwisave scheme, or if you are required to make payments to your student loan.
Tax rates are a hot topic in this year's coming elections so expect to see lower tax rates on earnings from the 2009 tax year.
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The Labour Government announced a package of tax cuts, the first of which will come into effect from 1 October 2008.
National are likely to reveal their own tax cut plans a few weeks before this year's election, which is likely to be towards the end of October.
Having won the election, National effected a new set of tax rates for the year beginning 1 April 2009, which can be seen here.